Medallion Signature Guarantees Explained: What Actually Matters for Your Transfer

Most people first learn about a medallion signature guarantee at the worst possible moment. You are trying to transfer securities. You have a form in hand. You are ready to move on with your life. Then someone tells you that you need a special stamp, available only at specific financial institutions, from specific employees, during specific hours.

The requirement feels old. The process feels confusing. And if you ask ten people what the stamp actually does, you may get ten different answers.

So let’s fix that - and get to the big question: How do I get this done safely and without unnecessary friction, while still satisfying the requirements of the institutions involved?

That is the real purpose behind medallion signature guarantees. They exist to protect high value transfers from fraud. At the same time, many organizations are now looking at digital tools that can strengthen identity and transaction assurance alongside these legacy requirements, especially in workflows that do not strictly require an MSG.

What is a medallion signature guarantee?

A medallion signature guarantee, or MSG, is a specialized certification used for certain securities transfers. It verifies the authenticity of a signature on  documents that move ownership of securities, such as physical stocks or bonds. Unlike a notarization, an MSG is backed by a financial guarantee. If the signature later turns out to be fraudulent, the institution that issued the MSG may be responsible for the loss.

Think of it as fraud insurance attached to a stamp. 

For people who manage their securities through a broker, they may never encounter an MSG. For others, especially those working with older certificates or paper based processes, the requirement still appears on forms and in transfer instructions.

In practice, the MSG is a way for transfer agents and financial institutions to shift some of the risk associated with a signature. The institution that issues the medallion is saying, in effect, “We know this customer, we have verified this signature, and we stand behind it financially.”

The stamp is not the important part. The assurance is.

Why does the medallion program still exist?

Two main reasons explain why medallion guarantees continue to show up in securities workflows.

First, they move risk away from the receiving institution.

If a fraudulent transfer slips through, the loss is not automatically on the company processing the transaction. The liability may fall on the institution that issued the MSG. That financial backstop is a core feature of the program.

Second, they are tied to legacy workflows.

For decades, the medallion program was one of the only widely adopted ways to validate the authenticity of signatures on paper certificates. Processes and forms get written, policies get embedded, and over time those requirements become part of standard operating procedure. Digital channels have evolved, but many of those paper era assumptions have not.

The friction is not intentional. It is inherited.

The real problem: the user experience is out of step with modern expectations

Here is the part everyone feels but rarely says out loud. MSGs are inconvenient for almost everyone involved. Common issues include:

• You cannot get one from every bank
• Even participating banks do not offer them at every branch
• Even qualifying branches may not have an authorized employee available every day
• Many institutions only provide them to existing customers
• They often require in person visits that slow down otherwise digital transactions

The result is a workflow that forces customers to leave a digital environment, find a branch, explain what they need, and hope that someone on site is both authorized and available.

Companies feel this pain too. They see:

• Higher abandonment rates
• Delays in completing transfers
• Confusion in customer support channels
• Paperwork that moves slower than everything else in the process

Customers want clarity and confidence. MSGs sometimes provide the assurance, but the path to obtaining them is rarely clear or convenient.

Digital medallion programs exist, but they miss the point

Some vendors offer digital medallion guarantee programs. The challenge is not the idea of digitizing a stamp. It is how the solution is implemented.

Some digital offerings focus more on the recreation of the medallion stamp instead of on the strong identity verification and transaction assurances that medallion signature guarantees are based on. This digital representation, rooted more in applying a digital version of an MSG, misses a key component of what makes the program useful in the first place.

That creates a fundamental mismatch. The purpose of the medallion program is to reduce fraud risk. A digital stamp that does not include robust identity proofing cannot address modern threats on its own. It may look official, but it does not provide the level of security that institutions and consumers expect.

The real need behind the medallion requirement

If a digital medallion stamp is only mimicking the look of the process, it is not solving the underlying problem. Medallion signature guarantees were created to reduce fraud in high value transfers by giving institutions confidence that the signature is legitimate and that someone is willing to stand behind it.

That purpose still matters. But the way fraud shows up today has changed. Identity theft, synthetic identities, deepfakes, and credential compromise happen at a scale that paper era methods were never designed to detect.

This is why many organizations are rethinking how they establish trust in a transaction. The medallion program is a specific legal and risk framework. It remains required where a transfer agent or institution says it is required. At the same time, there are many adjacent scenarios where the goal is similar, but the rules are more flexible. In those cases, stronger digital identity and execution tools can play a central role.

The goal is not to claim that medallion guarantees are obsolete or unnecessary. It is to recognize that the broader need they were designed to serve, the need for confidence and clear attribution, now depends on signals that go beyond a physical stamp.

Modern transactions need ways to validate who is signing, how the document was executed, and whether anything has been altered. That is where contemporary identity verification and notarization workflows can add real value.

Why digital identity assurance is a better fit for today’s risks

Fraud patterns have shifted from forged signatures on paper to sophisticated attacks that exploit digital channels. Synthetic identities, biometric deepfakes, credential theft, and AI generated documents move quickly and can be difficult to spot.

A physical stamp cannot detect any of this.

Modern identity assurance can.

With a solution like Proof, organizations can:

• Use advanced identity verification, including biometric checks and document analysis, to help reduce fraud risks
• Add human in the loop verification where additional oversight is needed
• Execute documents in a controlled, auditable, digital environment
• Apply tamper evident seals and cryptographic signatures to the final document
• Maintain detailed audit trails that show who signed, when, and under what conditions

This combination does not change when a medallion signature guarantee is legally or contractually required. That decision always rests with the institution or transfer agent that owns the process. What it does change is how secure and streamlined other high assurance transactions can be, and how much additional protection organizations can add around their existing workflows.

Some institutions have chosen to accept digital notarization instead of a medallion requirement for certain use cases, based on their own risk assessments and policies. In those situations, tools like remote online notarization can support a more efficient, more transparent experience without sacrificing assurance. 

So what should businesses do?

If you use medallion signature guarantees today, or you are responsible for high value transfers, it can help to ask:

• Where are we strictly required to use an MSG, according to our transfer agents, custodians, or regulators?
• Where are we using medallions mainly out of habit, rather than explicit requirement?
• In the spaces where we have flexibility, are we relying on the best tools available to validate identity and protect our customers?
• Are customers experiencing unnecessary friction because we send every scenario through the same legacy channel?
• Could digital identity verification and notarization help us modernize adjacent workflows, even if the medallion program remains in place for specific transactions?

The objective is not to ignore requirements. It is to align assurance methods with actual risk, and to use modern tools where they make sense.

The bottom line

Medallion signature guarantees were built for a world of paper certificates and in person processes. They still serve an important function in the specific contexts where institutions and transfer agents require them. At the same time, they are no longer the only way to bring confidence to a high value transaction.

Modern identity assurance and digital notarization can complement these legacy tools. They can help organizations protect more of their workflows, support customers who expect digital experiences, and build better evidence about who signed what and when.

In many cases, the path forward is not to choose between medallions and digital identity, but to use each where it makes the most sense.

And in every case, the real goal is the same. Trust that is earned, documented, and defensible.

If your organization is exploring how digital identity verification and notarization can support secure, compliant workflows, Proof can help.