- The SEC proposes allowing blockchain to serve as an official ownership record for securities under updated transfer agent rules.
- Transfer agents would report tokenized securities they service and identify the blockchain platforms used to manage them.
- The SEC seeks to modernize transfer agent rules, with public comments open for 60 days after Federal Register publication.
The SEC has proposed new rules allowing blockchain technology to serve as an official securities record, while updating transfer agent requirements. The proposal covers securities offerings and share transfers, and would require firms to report tokenized securities they service and blockchain platforms they use.
Transfer Agent Rules Get an Update
According to the SEC, registered transfer agents maintain ownership records for securities within the national clearance and settlement system. However, the agency said those firms now handle more functions than its existing rules fully address.
The SEC said its transfer agent rules have not received substantive updates since the first rules emerged in the late 1970s and early 1980s. The new proposal would amend existing rules and forms, rescind one rule, and add new requirements for registered transfer agents.
Notably, the proposal addresses the technology transfer agents currently use to manage records and communications. It would allow blockchain to serve as an official ownership record for securities.
Blockchain Reporting Requirements
The proposed framework would also add reporting requirements for firms servicing tokenized securities. Transfer agents would report how many tokenized securities they service and identify the blockchain platforms they use.
According to SEC Chairman Paul S. Atkins, the proposal would update rules around electronic communications and blockchain use. He said the changes cover securities offerings and the transfer of shares.
The SEC said the updates reflect the wider use of electronic recordkeeping and communications by transfer agents. Those services support issuers, investors and other market intermediaries.
SEC Sets 60-Day Comment Period
The SEC said the proposal seeks to modernize federal transfer agent rules while maintaining the functioning of U.S. securities markets. The agency also said the changes address how transfer agents now operate.
Meanwhile, Jamie Selway, director of the SEC’s Division of Trading and Markets, said the agency needs to revisit older rules as technology changes. He described the proposal as another step in Chairman Atkins’ regulatory efforts.
The proposing release has been published on SEC.gov and will appear in the Federal Register. The public comment period will remain open for 60 days after Federal Register publication.
