Institutional crypto exchange Bullish has agreed to acquire transfer agent Equiniti from Siris Capital for $4.2 billion. Bullish CEO Tom Farley, former President of the New York Stock Exchange (NYSE), characterized the acquisition as surfing the tokenization wave during its quarterly earnings call. Tokenized stocks can be traded on chain 24/7 and settle instantly.
While the likes of the DTCC are getting ready to launch tokenized stocks as security entitlements, these are on chain representations of stocks that continue to be held at DTC. By contrast, issuer sponsored tokens are natively digital with transactions directly recorded on chain by the transfer agent as the maintainer of the authoritative register. This elevates the position of the transfer agent from a back office utility to a pivotal role.
However, while the DTCC can tokenize stocks en masse, the drawback of issuer sponsored tokens is that each issuer must individually decide to tokenize its stock. Given the pace of change, that’s overly time consuming. Another barrier to entry is whitelisting investors to enable them to trade tokenized stocks. By acquiring Equiniti, one of the world’s largest transfer agents serving 3,000 issuers, Bullish can accelerate adoption by issuers and potentially whitelist 20 million stockholders who are investors of those clients.
This is the second recent transfer agent announcement, with the world’s largest transfer agent Computershare signing a partnership with tokenization firm Securitize last week.
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