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SEC proposes updates to transfer agent rules for blockchain era
The SEC said the rules it plans to update have not been significantly revised since they were first proposed in the late 1970s.
The U.S. Securities and Exchange Commission proposed changes to its transfer agent rules to modernize how transfer agents operate amid newer technologies such as blockchain and tokenized securities, according to The Block.
The SEC said transfer agents act as recordkeepers for securities, maintaining ownership records and handling corporate actions like mergers and dividend distributions, and they also support clearing and settlement.
In remarks accompanying the proposal, SEC Chair Paul Atkins said the effort would streamline and modernize the SEC’s rules to reflect transfer agents’ current processes, including electronic communications and blockchain technology tied to securities offerings and share transfers.
The SEC also said market participants are exploring blockchain-based systems for maintaining securities ownership records, and that transfer agents interacting with tokenized securities, distributed ledger technologies, and smart contracts may need to manage risks around blockchain data integrity, security, and distributed ledger operational models, while those using AI or automated tools should ensure proper controls and accurate representations, per the SEC’s fact sheet as summarized by The Block.