Key facts
- The SEC proposed updating transfer agent rules to reflect modern market infrastructure.
- The proposed rules address blockchain-based recordkeeping and tokenized securities.
- New compliance standards will cover cybersecurity, operational resilience, and record safeguarding.
- Expanded reporting requirements and new compliance standards will be imposed on transfer agents.
- Public comments are being sought on the proposed rule changes.
The U.S. Securities and Exchange Commission (SEC) has proposed to modernize its rules for registered transfer agents, which have remained largely unchanged since the late 1970s and early 1980s. The update aims to incorporate advancements such as blockchain-based recordkeeping and the rise of tokenized securities, acknowledging that the current framework does not adequately address the risks associated with increasingly digital and automated market infrastructure. The proposed changes will cover registration, recordkeeping, safeguarding of assets, and securities transfers, and are designed to mitigate risks related to cybersecurity, operational resilience, and the protection of investor records. Market participants are reportedly exploring blockchain-native transfer agent models, prompting the SEC to adapt its regulations. Under the new proposal, transfer agents would be subject to expanded reporting requirements and new compliance standards, including specific rules for restrictive legends on securities and the utilization of third-party service providers. The SEC is currently soliciting public feedback on these proposed amendments, with a comment period extending for 60 days following the proposal's publication in the Federal Register.