SEC Pressed to Differentiate Between Official and Third-Party Tokens

Continental Stock Transfer & Trust Company (CSTT) and the Securities Transfer Association (STA) argue that tokens created without an issuer’s approval may mislead investors regarding their ownership status. While issuer-sponsored tokens allow transfer agents to maintain accurate shareholder records and apply standard controls, unaffiliated tokens often function as mere price trackers. These synthetic arrangements fail to guarantee the same legal relationships, potentially leaving buyers exposed during insolvency or complicating processes like dividend payments and stock splits.

Industry groups are now calling on the SEC to modernize registration requirements to favor programs explicitly sanctioned by issuers. This stance aligns with concerns raised by SEC Commissioner Hester Peirce, who recently emphasized that blockchain technology cannot fundamentally alter the legal nature of an investment. As major institutions like the NYSE, Nasdaq, and DTCC develop regulated tokenization models that integrate with existing clearing infrastructure, transfer agents insist that future rules must prioritize these authorized channels to prevent market fragmentation and reputational risk.