Wall Street Transfer Agents Pressure SEC for Favorable Tokenization Rules
The Securities Transfer Association (STA), a powerful lobby representing Wall Street transfer agents, is intensifying its pressure on the Securities and Exchange Commission (SEC) to secure a regulatory framework favorable to the tokenization of financial assets. The organization warns of the risks that tokens issued by unmandated third parties could pose to market integrity, while arguing that tokenization authorized by traditional issuers should benefit from preferential treatment.
A Regulatory Battle Reshaping Tokenized Finance
As the tokenization of real-world assets—bonds, stocks, real estate, commodities—gains maturity, Wall Street’s legacy infrastructure is attempting to lock in its dominant position. The STA, which groups the major U.S. transfer agents (including subsidiaries of BNY Mellon, Computershare, Equiniti, and Broadridge), recently sent communications to the SEC to alert the regulator to what it considers a systemic threat: the issuance of tokens representing financial securities by unapproved entities with no direct link to the official records kept by traditional transfer agents.
In its arguments, the STA believes that only tokens “authorized by the issuer”—that is, backed by official records managed by approved transfer agents—should benefit from lighter regulatory treatment. So-called “third-party” tokens, issued without the backing of centralized records, are, according to the STA, inherently riskier for market integrity because they introduce layers of complexity, a risk of double-spending, and legal uncertainty over the actual ownership of the underlying assets.
The Lobby’s Strategy: Locking Down Infrastructure Before the Tokenization Boom
Transfer agents are the historical gatekeepers of shareholder records. Every time a security changes hands, these entities update the official register. With tokenization, this de facto monopoly is threatened: blockchains enable atomic settlement, real-time transparency, and radical disintermediation. Protocols such as Polymarket, Figures, Ondo Finance, and institutional platforms like Broadridge DLT are already transforming entire segments of post-trade finance.
By advocating for differentiated regulatory treatment, the STA seeks to enshrine a competitive privilege in regulatory stone. If the SEC accepts their argument, any token not backed by an approved transfer agent would be subject to stricter reporting, compliance, and capital requirements—a considerable drag on innovation and an almost insurmountable barrier to entry for new players.
Precedents and the SEC’s Current Stance
The SEC is no stranger to the tokenization landscape. Under Chair Gary Gensler, the Commission had already signaled that most tokens qualifying as securities fell under its jurisdiction. The current administration, led by Paul Atkins, has shown signs of openness to regulated tokenization—notably through the concept of a regulatory “safe harbor” for compliant tokenized projects—but has not yet ruled on the specific question of the transfer agents’ role.
The STA’s position comes at a time when several major dossiers are pending before the SEC: BlackRock’s application for a tokenized fund, proposals for on-chain securities exchanges filed by EDX Markets and Prometheum, and ongoing consultations on modernizing post-trade settlement rules (rules 15c6-1 and 17Ad-22).
The Danger of a Two-Tier Tokenization System
Critics of the STA’s lobbying point to a major risk: creating an asymmetric regulatory system that favors established players at the expense of innovation. If “authorized” tokens—those issued by the issuing entity and recorded via a traditional transfer agent—are treated as full-fledged securities, while tokens issued on decentralized protocols, through DAOs, or by non-traditional issuers are subject to stricter rules, the effect would be twofold.
On one hand, large institutional issuers (funds, banks, large corporations) would be incentivized to tokenize via legacy infrastructure, perpetuating their dependence on transfer agents and limiting the real benefits of blockchain—speed, cost reduction, transparency, programmability. On the other hand, innovative issuers, startups, DeFi protocols, and real-world asset (RWA) tokenization projects would be forced to go through these same intermediaries or face a prohibitive regulatory burden.
A Parallel with the DLT-SWIFT Battle
The situation echoes the battle that pitted SWIFT and traditional financial infrastructures against blockchain protocols for cross-border payments. For years, central banks and interbank networks tried either to absorb innovation (through projects like SWIFT GPI and CBDCs) or to regulate stablecoins and DeFi protocols outside the traditional ecosystem. Today, bridges exist, but the cost of compliance has considerably slowed the adoption of truly decentralized solutions.
In the case of tokenization, transfer agents might adopt a similar strategy: integrate blockchain layers into their existing systems—as Broadridge is already doing with its DLT Repo and BNY Mellon with its tokenized platform—while lobbying for competing solutions not backed by their ledgers to be slowed down by regulation. This is a classic financial industry strategy: innovate just enough to survive, while using regulation as a barrier to entry.
Transfer Agents’ Arguments: Protection or Protectionism?
The STA puts forward three main arguments to justify its request for preferential treatment:
1. Record integrity. Without an approved transfer agent guaranteeing the uniqueness of the register, it would be possible for the same security to be tokenized on multiple blockchains or sold to multiple buyers...
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