STA Urges SEC to Favor Issuer-Backed Stock Tokens in $5.5 Trillion Market
Updated
Updated · CoinDesk · Jul 13
STA Urges SEC to Favor Issuer-Backed Stock Tokens in $5.5 Trillion Market
3 articles · Updated · CoinDesk · Jul 13
Summary
The Securities Transfer Association asked the SEC to limit any tokenized-securities exemption, pilot or no-action relief to issuer-sponsored shares recorded on official shareholder registers.
In its letter, the group said third-party stock tokens—especially synthetic wrappers—can blur ownership, weaken voting and dividend rights, and add platform, custody and counterparty risk.
The push comes as tokenized securities draw heavy investment interest: Citi projects a $5.5 trillion market by 2030, while today’s roughly $2 billion tokenized-stock market is dominated by third-party synthetic models.
Some firms and lawyers argued the SEC should not lump all third-party models together, saying regulated custodial structures can preserve true ownership and should be distinguished from synthetic exposure.
The STA also urged modernization of the Direct Registration System, saying current DTCC-to-transfer-agent share movements are too slow as Nasdaq, NYSE, Coinbase, Robinhood and DTCC expand tokenized-equity plans.
As Wall Street tokenizes stocks, is the SEC protecting investors or the industry’s powerful old guard?
Will tokenized stocks give investors more power or just create a new generation of complex financial risks?
Tokenized Stocks Hit $6.4 Billion: How SEC Regulation and Market Innovation Are Reshaping U.S. Equities
Overview
The rapid growth of blockchain-based equity offerings is driving a heated debate on how tokenized stocks should be regulated in the U.S. The SEC has not yet set formal rules, but its future decisions will be crucial for shaping investor rights and the development of digital assets. This urgency is highlighted by major financial institutions working to integrate tokenization into the global equity market. Key industry voices argue that custodial tokenization, which preserves real stock ownership, should be treated differently from synthetic models, emphasizing the need for clear regulatory distinctions to protect investors as the market evolves.