The proposal aims to modernize rules that have largely remained unchanged since the 1980s, while addressing blockchain-based recordkeeping, tokenized securities and the growing use of automated market infrastructure.
The US Securities and Exchange Commission (SEC) has proposed updating decades-old rules for transfer agents as blockchain-based recordkeeping and tokenized securities gain a stronger presence in US markets.
The proposal would revise requirements for registration, recordkeeping, asset protection and securities transfers, while adding new rules to address risks created by increasingly digital and automated market infrastructure.
The SEC said market participants are actively working to bring blockchain-native, or “onchain,” transfer agents into the U.S. market, highlighting potential models for blockchain-based recordkeeping, tokenized fund administration and cross-chain interoperability.
The agency said its current regulatory framework does not fully address these changes, especially the risks tied to cybersecurity, operational resilience and the protection of securities and investor records.
Under the proposal, transfer agents would have to meet broader reporting requirements and new compliance standards, including rules covering restrictive legends on securities and their reliance on third-party service providers.
The SEC said its transfer agent rules have largely remained unchanged since the late 1970s and early 1980s, when the industry still depended heavily on paper certificates and manual recordkeeping.
The regulatory agency is inviting public comments on the proposed changes, with submissions due 60 days after the proposal appears in the Federal Register.
SEC Pursues Broader Changes to Securities Rules
The SEC is “on a mission to simplify its rules,” according to an analysis from law firm Cahill Gordon & Reindel that was sent to clients on Tuesday.
In May, the SEC put forward three major proposals to revise public-company reporting rules. The changes would let companies choose semiannual reporting, streamline the existing filer classification system and broaden access to simplified registered securities offerings.
Last week, the SEC sent a proposed overhaul of custody rules for investment advisers and investment companies to the White House for review. The potential changes would cover how firms hold crypto assets for clients and could establish clearer standards for advisers and funds handling digital assets while following federal securities rules.
