SEC Proposes Update to Transfer Agent Rules for Tokenized Securities

The U.S. Securities and Exchange Commission (SEC) has proposed an update to transfer agent rules that are nearly 50 years old, which could end the distinction between on-chain records and official shareholder lists for tokenized securities.

According to the proposal, electronic databases and blockchain ledgers could be used as the official record of security ownership, allowing blockchain to move beyond being just a technology added on top of existing market infrastructure.

Joris Delanoue, CEO of Fairmint, noted that official records of ownership have evolved from paper in filing cabinets to digital databases. The proposal could enable blockchain to be used as this database.

Eli Cohen, legal lead at Centrifuge, expressed concerns about the current two separate recording systems creating serious confusion in cases of insolvency or bankruptcy. Having blockchain as the primary security record could reduce the risk of ownership information conflicting across different systems.