SEC Proposes Blockchain-Based Transfer Agent Rules
The US Securities and Exchange Commission (SEC) has proposed an overhaul of its transfer agent rules to account for electronic and blockchain-based share records. The proposal, announced on September 1, would update record-retention, risk-management, and compliance requirements for registered transfer agents using blockchain systems.
The direct obligations would fall on registered transfer agents, including tokenization firms or issuers that hold that status. For blockchain-based registries, the proposal's practical effect would be to place their record-keeping systems inside a modernized rule framework.
A rewritten Rule 17ad-12 would require transfer agents to maintain written policies designed to safeguard securities and funds and to identify, measure, monitor, and mitigate material risks arising from their operations. Transfer agents would also need a business continuity plan and a separate bank account for issuer, securityholder, and third-party funds.
The proposal follows a non-binding staff FAQ in May 2025, which stated that a registered transfer agent could use distributed ledger technology as all or part of its official master security holder file if it complied with existing federal securities requirements.