SEC Proposes Blockchain-Friendly Transfer Agent Rules Overhaul
The US Securities and Exchange Commission (SEC) has proposed an overhaul of transfer agent rules to accommodate 'onchain' or blockchain-native recordkeeping models. The proposal aims to update long-standing requirements around transfer agent registration, recordkeeping, safeguarding, and securities transfer operations.
The current framework for transfer agents has not been substantively updated since the late 1970s and early 1980s, when paper-based processes dominated. The SEC believes that existing rules do not adequately address newer threats and operational challenges, particularly around cybersecurity and how securities and investor records should be safeguarded in a digital and automated environment.
The proposed changes target multiple areas of transfer agent operations, including expanded reporting requirements and new compliance standards related to restrictive legends on securities and the management of third-party service providers. The SEC is seeking public comment on the proposal, with deadlines set 60 days after publication in the Federal Register.