SEC tokenization stock program targets registrations, not tokens: Bitget analyst

The SEC proposes a 60-day rule-making process to modernize transfer agency systems serving blockchain records

As demand for tokenized stocks in the offshore market grows, the U.S. Securities and Exchange Commission (SEC) has proposed a 60-day rule-making process to modernize transfer agency systems serving blockchain records. The SEC rules will allow transfer agents to use blockchain-based systems to manage securities records. However, the proposal does not give the token legal shareholding status, nor does it grant the holder shareholder rights.

Focus on ownership records rather than trading venues

According to data provided by the Bitget exchange, from June 2 to July 19, the trading volume of tokenized shares on the platform reached US$1.16 billion. Ryan Lee, principal analyst at Bitget Research, told crypto.news that the SEC's proposal addresses one area of the tokenized stock market that has received less attention: the official record that shows who legally owns each share. Most tokenized stock products available outside the United States provide investors with price exposure through synthetic or custody structures. Under this arrangement, the platform or custodian holds the underlying securities and the investors have tokens that represent claims against the intermediary.

"The key difference is how ownership is recorded, not the token itself." Lee said. In traditional U.S. markets, registered transfer agents maintain issuer records, process ownership changes, and assist in managing corporate behavior. Lee pointed out that connecting tokens to an authoritative register of transfer agents allows legal ownership to appear in the same official record as traditional shares.

SEC proposes tokenize stocks to modernize the ownership system

The SEC's proposal, released on September 1, will update federal rules and forms that govern registered transfer agents. According to the agency, existing transfer agency rules have not been substantially updated since the late 1970s and early 1980s. According to the plan, transfer agents can use electronic communications and blockchain technology when handling securities issues and share transfers. The proposed changes also cover registration, reporting, record-keeping and safeguards for securities and funds.

SEC Chairman Paul Atkins said the proposal would update the rules to accommodate current transfer agency operations, including the use of blockchain technology. The public comment period will remain open for 60 days after the proposal is published in the Federal Register.

Lee warned that the rule-making involves the infrastructure that supports the ownership of the securities, rather than the legal status of the tokenized shares themselves. Adoption of this system will not automatically establish tokens as the underlying security, nor will it confer voting rights, dividends and other shareholder rights to their holders. "It modernizes the 'pipes' needed that ultimately require an authoritative tokenized registry." Lee called the proposal meaningful, while emphasizing that substantive securities law issues remained unresolved.

For U.S. investors, this distinction determines whether on-chain products constitute registered stock ownership or simply financial exposure linked to a listed company. Even if transfer agents store records on the blockchain, the terms of issuance, custody arrangements, and applicable securities laws will continue to govern investors 'rights.

Offshore data shows demand concentrated on active stocks

Bitget recorded US$1.16 billion in tokenized stock trading volume between June 2 and July 19. Non-crypto assets account for about 20% of its total trading volume, indicating that offshore users are already trading equity-linked products outside of a dedicated U.S. tokenization framework. Citing research by DeFiLlama, Lee said Bitget's activity is concentrated mainly among semiconductor and technology companies rather than evenly distributed among more than 500 listed stocks.

Research found that Bitget's median bid-ask spread was 0.83 basis points, the lowest among the five tokenized equity markets compared. Research also noted that the top of its order book records the deepest available liquidity. Lee described the data as evidence of the need for efficient trading of selected high-momentum stocks. However, transaction volume alone does not determine whether users will hold these products as long-term investments or trade them repeatedly.

Lee said that moving from price exposure to direct ownership requires clear rules on legal ownership and shareholder rights. A July study of tokenized stocks showed that the number of holders on five platforms grew 92% to 752,000 in 30 days. Robinhood has 328,000 holders, but assets are only US$44 million, with an average position of approximately US$134. Ondo holds $857 million in tokenized stocks, followed by xStocks with $487 million, suggesting that the number of holders and capital concentration can present a different adoption picture.

Shared records make tokenized shares interchangeable

Lee pointed out that legal interchangeability between U.S. regulated tokenized shares and offshore counterparts requires both products to point to the same authoritative ownership record. Without this connection, moving products between jurisdictions could create a separate tool rather than moving the original securities. Regulators first need to acknowledge that tokens held through offshore platforms representing U.S. registered securities remain the same securities. Lee believes cross-border recognition is the most difficult condition because jurisdictions have not yet determined how offshore holders can have claims on the same registered shares.

Market operators also need a common or interoperable clearing and registration layer. Instead of requiring two separate ledgers to be reconciled after each transaction, transfers will then update a record of acceptance. Company behavior increases operational requirements. Platforms and transfer agents must consistently apply dividends, shareholder votes, transfer restrictions and regulatory reporting so that assets do not gain or lose rights as they cross from one venue to another.

Current products deal with such rights differently. An August report on xStocks explained how Backed Assets collects voting instructions from token holders and passes them through its custody structure. Backed remains the beneficial owner of the underlying shares, while token holders receive contractual orders rather than direct registration as shareholders. Access rights also vary by jurisdiction. In July, Kraken added selected xStocks as collateral for futures and margin positions, but the service was limited to qualified users outside the United States. The release covers ten products, including tokenized versions of Apple, Nvidia, and Tesla, as well as the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust.

Coinbase and Base adopt another structure. Base founder Jesse Pollak said in July that the company was preparing tokenized shares backed one-on-one by underlying shares. Coinbase has said its planned non-U.S. products will represent equity ownership and include dividends and shareholder rights, although the companies have not disclosed the proposed custody or registration process.

Transfer agent control may become a competitive advantage

Lee said control of shareholder records could become more valuable as exchanges compete for fees, liquidity and trading hours. Each ultimately needs to settle transactions against the accepted ownership register, giving transfer agents a central position in the market structure. Lee cited Bullish's planned acquisition of Equiniti as an example to demonstrate that the company is steering capital towards registered infrastructure. The $4.2 billion deal, announced in May, will add a regulated transfer agent to Bullish's tokenization, trading and market infrastructure operations.

Equiniti maintains records for more than 2,500 companies and 20 million shareholders and processes approximately US$500 billion in payments annually. According to the deal announcement, the deal includes $1.85 billion in debt commitments and approximately $2.35 billion in Bullish stock. Lee said licensing requirements, established issuer relationships and trust in record keepers create high barriers to entry for transfer agency services. While the structure may concentrate activities in the hands of a few providers, he believes that a regulated and interoperable registry can reduce the fragmentation that prevents tokenized shares from becoming interchangeable.

Under Lee's preferred model, multiple authoritative registries will operate under clear supervision and communicate with each other, while exchanges compete through liquidity and execution. Bullish's transaction is expected to close in early 2027 and will require regulatory approval, and Equiniti's management will retain responsibility for day-to-day operations, compliance responsibilities and customer relations.