SEC Proposes Blockchain Rulebook Update to Reflect Modern Transfer Agent Practices

The US Securities and Exchange Commission (SEC) has proposed an update to its blockchain rules, which have not changed significantly since the late 1970s. The new proposal aims to modernize definitions and standards for transfer agents, who handle recordkeeping, processing, and settlement of securities.

Under the current framework, transfer agents relied on outdated paper-based processes, but with the increasing adoption of blockchain technology, the SEC is updating its rules to reflect this change. The proposal extends registration timelines from 30 to 45 days, requires faster fixes for inaccurate annual reports, and aligns processing standards with the current T+1 settlement cycle.

The new regulations also introduce stronger safeguarding requirements, including separate bank accounts for client funds and written cybersecurity policies. Additionally, transfer agents will need to disclose more detail about the blockchains and tokenized assets they support, which could ease institutional hesitation towards tokenized securities.