SEC Proposes Rule Changes for Transfer Agents to Reflect Tokenized Securities
Highlights
- The SEC has proposed to update the rules that apply to registered transfer agents.
- The updated rules will reflect agents' use of blockchain in their current operations.
- This comes as the SEC continues to modernize its rules to accommodate innovative technologies like crypto.
The U.S. Securities and Exchange Commission (SEC) is looking to modernize the rules for registered transfer agents. The proposed rules will accommodate these agents’ current mode of operations, including the use of blockchain technology.
SEC Proposes To Update Rules For Transfer Agents
In a press release, the Commission announced that it has proposed to update the rules and forms that apply to registered transfer agents. “Transfer agents now perform a more diverse array of functions and services that may not be adequately addressed by the Commission’s transfer agent rules, which have not been substantively updated since the first rules were adopted in the late 1970s and early 1980s,” the release read.
Commenting on the proposed rule change, SEC Chair Paul Atkins noted that the proposal would streamline and modernize the Commission’s rules to reflect transfer agents’ current processes and operations. This includes using blockchain technology in connection with securities offerings and the transfer of shares.
This comes as tokenized securities gain prominence, with traditional finance (TradFi) stakeholders moving assets onchain. Notably, the Commission is also seeking to introduce the innovation exemption rule for these tokenized securities.
Meanwhile, the proposed rule change for transfer agents comes less than a week after the SEC sent its proposal to the White House to overhaul custody rules to accommodate crypto assets. The Commission continues to provide regulatory clarity for the industry even as the CLARITY Act stalls.
What The Proposed Rules Will Entail
The proposed rule change would allow transfer agents to adopt blockchain to store ownership records for securities. Furthermore, these agents would need to disclose how many tokenized securities they have on record and which blockchain networks they use.
Notably, securities such as BlackRock’s tokenized fund trade on several networks such as Ethereum and Solana. Meanwhile, the crypto industry continues to see several Wall Street giants adopt tokenization.
Clearinghouse firm DTCC launched a pilot program in July to tokenize stocks and U.S. Treasuries, with the program set to roll out fully next month. Firms like BlackRock, JPMorgan, and Goldman Sachs were among those that participated in the trial.
For more on tokenization, check out Best Platforms to Trade Tokenized Stocks
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