SEC Proposes Blockchain-Friendly Transfer Agent Rules Overhaul

The Securities and Exchange Commission (SEC) has proposed an overhaul of the rules governing registered transfer agents, which maintain official records of who owns a company's securities. The proposal aims to modernize the framework, explicitly naming blockchain technology as one of the tools it is meant to accommodate.

Transfer agents process transfers, issuances, and cancellations of shares, both paper and electronic. The SEC stated that the current rules have not kept pace with their actual operations, which now involve electronic communications and blockchain technology.

The proposal would extend the effective date of transfer agent registration from 30 to 45 days, update terminology to reflect contemporary recordkeeping methods, align turnaround standards with the securities settlement cycle, and raise the threshold for business expansion limitations from 75% to 95%. It also consolidates recordkeeping and retention requirements into a single period.

The SEC emphasized that the proposal does not approve any specific blockchain-based transfer system or grant different regulatory treatment. Instead, it provides clearer language to assess such activities against existing rules.