STA Calls on SEC to Prioritize Issuer Authorization Model

The Securities Transfer Association (STA) has written to the U.S. SEC, urging the agency to clearly distinguish between issuer-authorized tokens and third-party tokens when formulating rules for stock tokenization, and to prioritize the issuer authorization model. The STA pointed out that third-party tokenized stocks could mislead investors, undermine shareholder rights, and expose holders to platform, custody, and counterparty risks, rather than establishing a direct legal relationship with the issuer. The STA also requested that the SEC require platforms to obtain explicit consent from issuers before packaging products as tokenized stocks of publicly listed companies, and to promote the simplification of the Direct Registration System (DRS) by DTCC and transfer agents to meet the development needs of the digital securities market. Currently, the tokenized stock market, valued at approximately $2 billion, primarily adopts a third-party synthetic model led by Ondo Finance and Kraken xStocks, and the SEC has yet to propose formal rules for tokenized securities.

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