A major US securities industry association has called on the Securities and Exchange Commission (SEC) to take a firm stance in the evolving sector of tokenized stocks by clearly favoring company-authorized tokens over synthetic versions issued by third parties. The Securities Transfer Association (STA), which represents transfer agents and other market participants, conveyed its position in a letter sent to the SEC on July 1.
STA seeks clarity on tokenized assets
The STA argued that only tokens created by the companies themselves should receive preferential regulatory treatment, while synthetic tokens—those generated by outside crypto platforms—should not be placed on equal footing. According to the association, distinguishing between these models could help protect investor rights and market stability as tokenization expands.
Citi analysts estimate that the market for tokenized securities could reach $5.5 trillion by 2030, with company-issued tokenized stocks making up $2.6 trillion. Currently, the majority of the approximately $2 billion tokenized-stock market is based on synthetic offerings, primarily operated by firms such as Ondo Finance and Kraken, especially through Kraken’s xStocks platform. US retail investors are mostly barred from accessing these products.
Mini dictionary: The Securities Transfer Association (STA) is a US-based trade group representing organizations that track changes of ownership in securities, notably transfer agents and similar institutions.
| Metric | Current (2024) | Projected (2030) |
|---|---|---|
| Tokenized securities market size | ~$2 billion | $5.5 trillion |
| Tokenized stocks component | N/A | $2.6 trillion |
SEC’s approach under review
In January, SEC staff acknowledged the division between custodial tokens issued with company approval and synthetic tokens produced by external parties. However, formal regulatory rules have not yet been put forward. This regulatory uncertainty has prompted the agency to delay a proposed “innovation exemption” earlier this year due to ongoing concerns about the risks of synthetic tokenization.
The SEC’s forthcoming decisions regarding the classification and treatment of these digital stocks are likely to have a substantial impact on market participants and investors. Disagreements about investor protections and legal rights tied to new token models remain at the forefront as platforms rapidly innovate in this area.
Uptick in institutional interest and onchain equities
The debate comes as leading institutions, including major stock exchanges and fintech platforms, accelerate their plans to bring traditional equities onchain. Coinbase and Robinhood have intensified their efforts to integrate blockchain technology into the equities market, while established exchanges such as Nasdaq and the New York Stock Exchange have revealed partnerships and pilot programs to explore tokenized equity trading.
Executives from Ondo Finance and Kraken—platforms at the center of the synthetic-token model—have stated that their solutions provide liquidity and efficiency benefits, although legal and regulatory questions remain unresolved.
While proponents of company-backed tokens assert that they strengthen investor rights and meet strict regulatory standards, supporters of synthetic versions argue that their products increase market accessibility and innovation. Industry participants expect further regulatory commentary and potential rulemaking later this year.
STA has urged the SEC to recognize only company-authorized tokenized stocks as eligible for streamlined regulatory treatment, raising concerns about legal risks and investor protections around synthetic token models.
With the SEC signaling close attention to the rapidly developing tokenization landscape, market participants await further clarity on the legal boundaries of tokenized equities and their future place in US markets.
