Continental Stock Transfer and the Securities Transfer Association said only issuer-sponsored tokenized securities should move forward, warning third-party versions could weaken investor protections, shareholder records and market integrity.
Traditional securities transfer agents are pressing the SEC (U.S. securities regulator) to confine tokenized stocks and ETFs to issuer-sponsored models rather than allow broader third-party or synthetic versions. Continental Stock Transfer & Trust Company and the Securities Transfer Association said they support innovation in securities markets, but argued that only tokenized shares created with an issuer’s consent qualify as actual securities tied to the issuer. They warned that third-party tokens could create investor confusion, weaken disclosures, disrupt corporate actions and governance, and reduce the reliability of shareholder records and transfer controls. The groups also called for updates to securities registration processes and said any innovation relief for third-party tokenized stocks and ETFs should come only with safeguards. The push comes as crypto firms including Coinbase, Kraken and Binance expand into stocks, ETFs and derivatives, and as tokenization of traditional financial instruments gains traction.