The Securities Transfer Association, or STA, has asked the U.S. Securities and Exchange Commission to give regulatory priority to issuer-authorized tokenized securities, arguing that third-party stock tokens could weaken market integrity. In a comment letter, the group said tokenized shares should be formally authorized by the issuing company and recorded on the official shareholder register, rather than created as wrapped products by independent platforms. STA said the third-party model may confuse investors about the rights they actually hold and expose them to platform credit, custody, and operational risks, while leaving them without a direct legal relationship with the listed company. The association also called on the SEC to reform the Direct Registration System, or DRS, saying the current U.S. securities custody structure is not built for real-time transfers and settlement of on-chain securities. It recommended that regulators work with the Depository Trust & Clearing Corporation, or DTCC, to improve digital securities infrastructure. According to CoinDesk, the global tokenized stock market is currently worth about $2 billion and is still dominated by third-party models, including products from Ondo Finance and Kraken, while firms such as Securitize and Figure use an issuer-authorized approach.
The Securities Transfer Association (STA) has submitted a comment letter to the U.S. Securities and Exchange Commission (SEC), warning that stock tokens issued by third parties could undermine market integrity as competition in capital-market tokenization picks up.
STA backs issuer-authorized tokenized securities
The association, which represents multiple Wall Street transfer agents, said tokenized shares should be formally authorized by the issuing company and entered on the official shareholder register, rather than created by independent platforms as wrapped token products.
Group says third-party structures can blur investor rights
According to STA, third-party stock tokens may leave investors unclear about the rights they actually hold. The group also said this structure can expose investors to platform credit, custody, and operational risks, while denying them a direct legal relationship with the listed company.
For that reason, STA said any innovative exemption, pilot program, or permanent regulatory framework for tokenized securities should give priority to issuer-backed models.
Call for DRS reform and infrastructure upgrades
STA also urged the SEC to reform the existing Direct Registration System (DRS), saying the current U.S. securities custody system cannot meet the needs of on-chain securities that require real-time transfer and settlement. It also recommended that regulators work with the Depository Trust & Clearing Corporation (DTCC) to improve digital securities infrastructure.
Market still led by third-party products
CoinDesk reported that the global tokenized stock market is currently worth about $2 billion and is mainly dominated by third-party models, including products launched by Ondo Finance and Kraken. By contrast, firms such as Securitize and Figure use an issuer-authorized model.
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