Wall Street transfer agents lobby SEC, warning that third-party tokens pose risks to market integrity

The Securities Transfer Association (STA), a trade group representing transfer agents and its members, which include major Wall Street institutions, is urging the Securities and Exchange Commission (SEC) to give preferential treatment to issuer-sponsored tokenized securities compared to tokens issued by intermediary firms as it develops rules for bringing traditional securities onto blockchain rails.

The STA argued in a letter to the agency that blockchain-based shares should be actual securities authorized by the underlying issuer and reflected in its official shareholder records rather than tokens created by unaffiliated platforms.

"The distinction is fundamental," the letter said. "An Issuer-Sponsored Token is an actual share or other security of the Corporation." Meanwhile, holders of third-party tokenized stocks instead face the credit, custody and operational risks of the platform issuing those tokens, the letter argued.