SEC Proposes Blockchain-Friendly Update to Decades-Old Transfer Agent Rules

The US Securities and Exchange Commission (SEC) has proposed updating its decades-old transfer agent rules to accommodate blockchain-based recordkeeping and tokenized securities.

The current framework, which has not been substantively updated since the late 1970s and early 1980s, does not adequately address the risks associated with digital and automated market infrastructure, according to the SEC.

The proposal would introduce new rules aimed at addressing cybersecurity, operational resilience, and the safeguarding of securities and investor records. Transfer agents would face expanded reporting requirements and new compliance standards, including rules governing restrictive legends on securities and the use of third-party service providers.