SEC Targets Blockchain Era With Transfer Agent Rule Overhaul As Wall Street Ramps Up Tokenization

The SEC proposed updating decades-old transfer agent rules to reflect electronic communications and blockchain-based securities systems.

• SEC Chair Paul Atkins said the changes would better match how transfer agents operate today, including the use of blockchain technology.
• The proposal could give tokenized securities a clearer framework for recording ownership and transferring shares on distributed ledgers.
• Tokenization is accelerating on Wall Street and across the financial industry as a whole. 

The U.S. Securities and Exchange Commission (SEC) on Tuesday proposed a sweeping change to rules covering registered transfer agents, the companies that keep track of who owns securities and move securities between investors, in an effort to update the rules.

Transfer agents are regulated financial intermediaries that maintain shareholder records, facilitate the transfer of securities, and manage certain corporate actions.

The proposed changes, the SEC said, would modernize a regulatory framework that has not changed much in decades and could make the rules better suited for modern securities markets and emerging technologies.

SEC Chairman Paul Atkins said, “This proposal would streamline and modernize the Commission’s rules to reflect transfer agents’ current processes and operations, including the use of electronic communications and blockchain technology in connection with securities offerings and the transfer of shares.”