SEC Tackles Decades-Old Transfer Agent Rules Amid Tokenization Boom
The US Securities and Exchange Commission (SEC) is proposing to modernize decades-old rules for transfer agents, which maintain records of who owns an issuer's securities. The proposal aims to bring electronic records and blockchain-based processes into line with current market practices.
Transfer agents are crucial in the tokenization process, as they ensure that transfers comply with securities law. Tokenized stocks bring a new layer of complexity, as investors need to understand what ownership structure their tokens represent.
The SEC is not proposing a separate set of rules for tokenized securities but rather updating existing infrastructure to accommodate newer technology. The proposal includes written policies for identifying and managing material operational risks, business continuity requirements, and stronger safeguards for securities and funds.