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- Explains issuer-sponsored tokens as blockchain-based shares, alongside DRS share and certificated ownership
- Clarifies how IST ownership records are handled and what shareholder rights are included
- Describes ISTs’ benefits, risks and current limitations, along with their trading infrastructure
Peter Duggan is an executive vice president in the issuer services business at Computershare, a global stock transfer agency. I spoke with Duggan about the company’s introduction of issuer-sponsored tokens (ISTs) and what individual investors should know about this new digital form of share ownership.
—Charles Rotblut, CFA
Charles Rotblut: What are issuer-sponsored tokens, and how do they differ from traditional shares of stocks?
Peter Duggan: Let me first start with what is not changing.
An accurate, trusted record of stock ownership remains fundamental to the functioning of capital markets. As a transfer agent, that has always been Computershare’s role—to maintain reliable shareholding records and perform related services as well as issuer services for our clients and their customers, the shareholders. This work remains central to our role as a transfer agent.
Currently, investors who wish to hold shares outside of a brokerage account have two choices: physical stock certificates, if the company offers them, or book-entry shares, such as shares held through the Direct Registration System (DRS).
For DRS book-entry shares, a transfer agent (such as Computershare) records the investor’s name, address and the number of shares held in a “book-entry position” without issuing the physical stock certificate.
Issuer-sponsored tokens (ISTs) provide another option for shareholders to directly hold shares.
Computershare recently announced that through a technology agreement with Securitize, it will support U.S.-listed clients that choose to issue ISTs.
This model allows for the delivery of a tokenized security to the investor’s wallet on a public blockchain. It’s not a special wallet specific to Computershare. Investors use their own wallet(s), which may also hold their other digital assets such as cryptocurrencies.
Note that ISTs on the blockchain may only be transferred to another individual or entity who has been “allowlisted.” Allowlisting is when a shareholder has successfully completed identity verification and sanctions screening and is connected to their digital wallet.
Many individual investors are unfamiliar with DRS shares. Could you explain what they are?
Absolutely, but let me first present a couple of basic facts, on the off chance that even one of your readers may need the information.
The U.S. Securities and Exchange Commission (SEC) requires every public company to maintain a master securityholder file, which is a registry that lists all of the company’s registered shareholders.
Public companies often appoint a transfer agent to maintain that file. Computershare serves as a transfer agent or registrar to companies in 22 countries around the world. In the U.S., we are the transfer agent for more than 2,500 clients, which includes 58% of the companies in the S&P 500 index.
The DRS allows investors to hold registered shares in uncertificated form, and those shares are recorded electronically on the share registry.
As such, these registered shareholders, also called shareholders of record, are the legally recognized owners of the shares. They can access their holdings directly, participate in corporate actions, receive dividends and perform transactions without an intermediary such as a broker. They also receive proxy materials and can vote directly at annual meetings.
For certificated shareholders, their ownership is represented by the physical stock certificates, and they receive all the same shareholder rights as DRS shareholders.
However, other shareholders hold their shares through a broker or bank. These investors are beneficial owners, whose holdings differ from those of DRS and certificated shareholders. Shares held through a broker or bank are generally held in the name of the clearing agent, the Depository Trust Company (DTC).
Transfer agents record the DTC nominee as one holder on the master securityholder file with a very large number of shares (the pool of beneficial owners), which may account for millions of shares. The beneficial owners are not recorded on the company’s register, and only the banks or brokers know who those owners are.
Key Terms About Stock Ownership
Beneficial Owner: An investor who holds shares indirectly, through a bank or broker-dealer. Their shares are typically registered on the issuer’s books in “street name”—specifically, Cede & Co., the nominee of the Depository Trust Company—while the broker-dealer maintains the records identifying the beneficial owners.
Custody: The holding of an investor’s securities and funds. Custodians are typically broker-dealers, banks or mutual fund companies. For digital assets, custody comes down to who controls or can access the private keys (“passwords”).
Depository Trust Company (DTC): A central securities depository that provides settlement services for virtually all U.S. broker-to-broker stock, corporate bond and municipal bond transactions. The DTC also holds most publicly traded shares in nominee name (Cede & Co.) on behalf of brokers and banks that manage beneficial owners’ accounts.
Direct Registration: Security positions held through a company’s transfer agent, like Computershare.
Direct Registration System (DRS): An arrangement that allows investors to have their shares listed electronically with the issuer, eliminating the need to own physical stock certificates.
Master Securityholder File: The registry of all of a public company’s registered shareholders, required by the U.S. Securities and Exchange Commission (SEC) and typically maintained by the company’s transfer agent.
Nominee: The name in which securities are registered on an issuer’s books on behalf of the actual owners. Most shares held in street name are registered to Cede & Co., the nominee of the Depository Trust Company.
Registered Shareholder: Also called a shareholder of record, this is an investor whose shares are recorded directly in their name on the company’s master securityholder file, maintained by the transfer agent. Registered shareholders can access their holdings directly, receive dividends and proxy materials from the company, and vote at annual meetings without going through a broker.
Securities Investor Protection Corp. (SIPC): A nonprofit organization that protects securities and cash held in a brokerage account up to $500,000 ($250,000 for cash). SIPC coverage does not extend to shares held directly with a transfer agent, including DRS shares, certificated holdings and issuer-sponsored tokens.
T+1: A settlement cycle that settles trades of stocks, bonds, municipal securities, exchange-traded funds (ETFs), most mutual funds held by individual investors and limited partnerships, including U.S. publicly traded stocks, one day after their transaction date.
Transfer Agents: Registered with the SEC or bank regulatory agencies, transfer agents record security ownership changes, maintain records of holders for each issuer, distribute dividends, and both issue and cancel stock certificates.
Wrapper: A product created by a financial institution without the underlying security’s involvement. As used in this article, a wrapper can hold shares of a public company or other assets in a special purpose vehicle. These wrappers may issue tokens representing a claim on that vehicle. Investors in a wrapper own an interest in the vehicle, not the underlying shares, and shareholder rights such as dividends or proxy voting may or may not be passed through. Sometimes called synthetics, wrappers are a form of derivative.
Source: AAII.
Is the transfer agent always involved? For example, how does a dividend get paid when the DTC is involved? I think a lot of investors are unaware of what goes on behind the scenes when it comes to the logistics of share ownership.
Yes. When an issuer pays a dividend, the transfer agent is always involved. The transfer agent distributes the dividends to registered shareholders, which includes the DTC’s nominee position.
The DTC then allocates the dividend distributions to the brokers and banks, who, in turn, allocate them to their client shareholders.
In the case of ISTs, DRS shares and certificated holders, the investors receive everything directly from the company through its transfer agent.
This structure is also true for other types of issuer corporate actions and communications.
To clarify, is it accurate to say that issuer-sponsored tokens are still shares of a company’s stock, just in a different format?
That’s correct.
Do holders of these tokens still get the same dividends and voting rights as traditional stock shareholders?
Yes. If a company provides an IST option, the shareholder decides if they want to hold their investment as tokenized shares or in another form. It’s entirely up to the shareholder and their preferences. They receive the same dividends and voting rights.
There are other products—called “wrappers,” or “synthetics”—issued by financial institutions that buy shares in a public company without the company’s involvement and hold them in a brokerage account. They then create a special purpose vehicle that owns those shares and issues them under a name like “XYZ Co. tokens.” These wrapper tokens are derivatives, not the actual share itself, unlike ISTs, which are the share.
When investors buy wrapper tokens, they are not buying shares of XYZ Co., and their name does not appear on the company’s register. Rather, they are investors in the special purpose vehicle, which holds the underlying shares in a brokerage or custody account.
Shareholders should understand what rights a financial instrument affords them before they make an investment. For example, a wrapper token may pass through dividend distributions to investors but may not offer proxy voting rights.
Also, multiple financial institutions may issue wrapper tokens linked to the same public company through several different special purpose vehicles under different names. As a result, investors may see several derivatives that use the company’s name without its involvement.
Each wrapper token may have different rules around what rights may or may not be passed through to the investor. As a result, investors could be exposed to the counterparty risk of the issuing entity—the special purpose vehicle—and the custodian holding the underlying shares.
As investors become more aware of tokenized shares and potentially start to hold their equity in this manner, it’s crucial that they understand the difference between issuer-sponsored tokens and wrappers. We encourage any investor to do their own homework and talk to their financial adviser.
For issuer-sponsored tokens, the token is the security and the shareholder is recognized as a legally registered shareholder and recorded on the master securityholder file. As a result, the holder receives the rights associated with registered shareholder ownership, including issuer communications and proxy voting.
As we speak in June 2026, are issuer-sponsored tokens trading yet? If so, where do they trade?
The SEC issued guidance on how tokens can be held—whether they are wrappers or issuer-sponsored tokens. This led Computershare to take the first step of creating its current structure: If the issuer decides that it wants to offer a token and the investor decides that they want to hold it, through our partnership with Securitize, we will mint the token and deliver it to the investors’ wallets.
It’s worth saying here, as a reminder, that transfer agents aren’t brokers; we are recordkeepers and agents of the security issuer.
The next step is for the marketplace to start creating trading markets for the tokens. Today, I don’t believe any issuer-sponsored tokens for public equities are traded on any of the national exchanges, although some exchanges have announced that they are either exploring or developing an infrastructure to support tokenized securities.
Alternative trading systems and other platforms currently support some trading of tokenized equities, but the market remains fragmented at this early stage.
With the beginnings of an infrastructure in place, market participants are now considering how to best support trading. While some trading platforms may not support the sale or purchase of tokenized shares yet, an investor can convert ISTs to a DRS holding and then may be able to sell it through the transfer agent or move it to a brokerage account.
Notably, investors can currently transfer their ISTs to another person through a private sale if they wish. That’s just a transfer from one person to another on the transfer agent’s books.
Key Terms About Tokenized Shares
Atomic Settlement: The instant and simultaneous settlement of a transaction between two parties.
Digital Wallet: An app or computer software that holds the private keys (“passwords”) for your digital assets. Wallets can be connected to the internet (“hot”) or be on a physical device, such as a thumb drive, that is not connected to the internet (“cold”).
Issuer-Sponsored Tokens (ISTs): Shares issued directly by a company in tokenized form and held in a digital wallet on a blockchain. Unlike wrapper tokens, the token itself is the security, and the holder is a registered shareholder on the company’s books with the same rights as holders of DRS or certificated shares—including dividends and proxy voting.
On Chain: Transactions that occur directly on a blockchain. These transactions are recorded and validated on the blockchain.
Public Blockchain: A decentralized, publicly accessible ledger that records transactions and asset ownership. Ethereum and bitcoin are examples.
Source: AAII.
What is the advantage of owning a token over traditional stock?
No matter what form shares are held in, each has its own benefits. It’s very much a matter of preference.
With that said, there are a couple of benefits that issuer-sponsored tokens provide to investors. Before ISTs, investors generally could not hold public company shares in the same digital wallet as other digital assets such as bitcoin or private tokens.
Issuer-sponsored tokens also make share transfers instantaneous. Investors can send tokenized shares from one wallet to another on the blockchain at any time, subject to the issuer’s requirements and the blockchain’s operation. The transfer agent then reflects the ownership record change on the company’s master securityholder file.
Will issuer-sponsored tokens be covered by the Securities Investor Protection Corp. (SIPC)?
SIPC coverage is designed to protect brokerage customers’ assets held at an SIPC-member brokerage firm. Issuer-sponsored tokens are not held in brokerage accounts. ISTs are the equity of the issuing company, and the holders are registered shareholders of such company. As such, the SIPC doesn’t apply.
Have any companies started offering tokens, or is this a framework that’s still being built?
Many companies are in an “educational phase.” Since we announced our capability to provide issuer-sponsored tokens in April 2026, we’ve been talking with a number of issuers. The market for tokenized securities is really in the early stages now.
Why would I want to hold shares in token form instead of other forms?
To some investors, the ability to trade instantaneously without settlement periods is a significant advantage; this is called atomic settlement.
Even though the U.S. is now at T+1—meaning that stock trades on an exchange settle the following business day—issuer-sponsored tokens enable investors to instantaneously deliver shares from their wallet to someone else’s wallet on the blockchain.
And importantly, the transaction is officially recorded on the company’s register.
Issuers that elect to offer an IST decide on the parameters for such holdings, including which blockchain(s) they will allow their tokens to be held on and which type of wallet(s) they will allow to hold their tokens.
For example, if a company selects ethereum, only eligible ethereum wallets can hold that tokenized security. But, if the issuer approves four different blockchains, supporting technology and issuer rules will determine that ISTs are compatible between any of those chains.
And as noted earlier, some investors may prefer to hold equities in a wallet with their other digital assets.
What do investors need to do to report capital gains and dividends from issuer-sponsored tokens on their taxes? Is it up to the investor to look at the ledger and track it?
Because issuer-sponsored tokens are another form of registered shareholding, the transfer agent maintains the same information as it would for a book-entry position or certificated shares—including names of holders and their numbers of shares.
If the investor sells through the transfer agent, the transfer agent executes the transaction through a broker, records the sale price and sends the Form 1099-B to the investor at year-end.
Similarly, if somebody moves their shares out of a brokerage account and onto our [Computershare’s] books—whether they become a DRS or certificated shareholder or a tokenized equity shareholder—the broker is required to pass the cost basis or the original tax cost of shares to us.
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