Svmuu News: As competition in the tokenization of capital markets intensifies, the Securities Transfer Association (STA) recently submitted a comment letter to the U.S. Securities and Exchange Commission (SEC), warning that equity tokens issued by third-party entities could undermine market integrity and calling on regulators to prioritize tokenized securities authorized by publicly traded companies in future rulemaking.
The STA represents numerous Wall Street transfer agents, whose members believe that genuine tokenized stocks should be formally authorized by the issuing companies and recorded in official shareholder registers, rather than being “wrapped” token products created by independent platforms.
The association pointed out that third-party stock tokens may confuse investors about the actual equity interests they hold and expose them to platform credit, custody, and operational risks, while preventing them from establishing a direct legal relationship with the listed company. Therefore, any innovative exemptions, pilot programs, or permanent regulatory frameworks for tokenized securities should prioritize the issuer-backed model. The STA also urged the SEC to reform the existing Direct Registration System (DRS), arguing that the current U.S. securities custody system struggles to meet the real-time transfer and settlement needs of on-chain securities, and recommended that regulators collaborate with the Depository Trust & Clearing Corporation (DTCC) to optimize digital securities infrastructure.
Currently, the global tokenized equity market—valued at approximately $2 billion—is primarily dominated by the third-party model, including products launched by Ondo Finance and Kraken, while firms such as Securitize and Figure have adopted the issuer-authorized model. (CoinDesk)