“I would urge the Commission not to reject third-party equity tokens, but to treat them as what they are – another class of financial instruments with clear separation from real shares.”
Not everyone agrees
However, some market participants say the STA’s proposal risks grouping together fundamentally different tokenization models.
“The key is whether the tokens represent true equity ownership or just financial exposure,” Dinari CEO Gabe Otte told CoinDesk.
He said many of STA’s concerns are valid, but apply primarily to synthetic tokenized products. He pointed to the SEC’s January statement, which separates custodial tokenized securities from synthetic structures, arguing that regulated custody models should be evaluated separately.
“Both issuer-sponsored and custodial models offer genuine share ownership and these should be separated from synthetic models for the benefit of the end investor,” Otte said.
Alan Konevsky, CEO of digital securities platform tZERO, agreed that issuer-sponsored tokenization offers important benefits in maintaining the direct relationship between companies and investors. But he argued that the market is likely to support more compatible approaches.
“Innovation is accelerating, and we expect more compatible, non-misleading, economically and technologically meaningful models to emerge as the market matures,” Konevsky said.
Eli Cohen, general counsel at tokenization platform Centrifuge, which focuses on bringing funds on-chain, said the letter reflects transfer agents’ concerns that issuer-sponsored tokenization could lose ground if third-party models become more prevalent.
