The US Securities and Exchange Commission has proposed a broad overhaul of the rules governing transfer agents, arguing that a framework built decades ago no longer fits a market where blockchain-based recordkeeping and tokenized securities are becoming more visible.
The proposal would revise requirements covering registration, recordkeeping, safeguarding and securities transfers. It also adds new rules aimed at risks tied to increasingly digital and automated market infrastructure.
The SEC said market participants are actively trying to bring blockchain-native, or "onchain," transfer agents into the US market. It pointed to several models now in view: blockchain-based recordkeeping, tokenized fund administration and cross-chain interoperability.
According to the agency, the current regulatory structure does not adequately address those developments. It highlighted risks linked to cybersecurity, operational resilience, and the safeguarding of securities and investor records.
Under the proposal, transfer agents would be subject to broader reporting requirements and new compliance standards. Those standards would include rules on restrictive legends on securities and on the use of third-party service providers.
The SEC said its transfer agent rules have not been substantively updated since the late 1970s and early 1980s, a period when the industry still relied heavily on paper certificates and manual recordkeeping.
The agency is now seeking public comment on the proposal. Comments will be due 60 days after the proposal is published in the Federal Register.
Part of a wider SEC rulemaking push
The proposal lands as the SEC is also working through broader securities rule changes. Law firm Cahill Gordon & Reindel said in an analysis sent to clients on Tuesday that the SEC is "on a mission to simplify its rules."
In May, the SEC proposed three major changes to public-company rules. Those proposals would let companies choose semiannual reporting, simplify the current filer classification system and expand access to streamlined registered securities offerings.
Last week, the SEC sent a proposed overhaul of custody rules for investment advisers and investment companies to the White House for review. Potential changes could affect how firms hold crypto assets for clients. If adopted, the revisions could give investment advisers and funds clearer standards for custodying digital assets while complying with federal securities rules.