SEC proposes updates to transfer agent rules for blockchain and tokenized securities
SEC targets 1970s rules for a blockchain update
The U.S. Securities and Exchange Commission (SEC) has proposed changes to its transfer agent rules, which have not seen major updates since the late 1970s. Transfer agents keep records of who owns securities, handle corporate actions like mergers, and help with clearing and settlement.
The SEC says the update is needed to reflect current practices, including the use of electronic systems, blockchain technology, and tokenized securities—digital versions of traditional assets like stocks or bonds recorded on a blockchain.
Key changes in the proposal
The proposed rule changes aim to modernize terminology and address risks tied to new technologies. This includes managing data integrity for blockchain-based records, securing tokenized securities, and overseeing automated processes that use artificial intelligence.
SEC Chair Paul Atkins said the proposal would streamline rules to match how transfer agents now operate, including their use of electronic communications and blockchain for securities offerings and share transfers.
Industry moves toward blockchain-based systems
Some firms are already using blockchain to track ownership of tokenized assets. Injective, Securitize, and tZERO are among the companies registered as transfer agents that work with tokenized securities. The SEC’s 421-page proposal highlights the need for controls to ensure accuracy and security in these systems.
Next steps and reactions
The SEC is accepting public comments on the proposal for 60 days. Commissioner Hester Peirce, who is leaving the agency soon, supported the changes and said she would follow the process from outside the SEC as it finalizes the rule.
What is confirmed
- The SEC proposed updates to transfer agent rules last updated in the 1970s.
- The changes aim to address electronic systems, blockchain, tokenized securities, and AI.
- Transfer agents maintain ownership records and assist in clearing and settlement.
- Injective, Securitize, and tZERO are registered transfer agents working with tokenized assets.
- The public comment period lasts 60 days.
