SEC Proposes New Transfer Agent Rule to Integrate Blockchain Technology

SEC Proposes Modernized Transfer-Agent Rules

The proposed rule changes seek to adjust the role of transfer agents—the firms responsible for tracking changing ownership of securities—to keep pace with instantaneous digital settlements, according to regulatory disclosures. SEC Chairman Paul Atkins said in a statement that the update covers “the use of electronic communications and blockchain technology in connection with securities offerings and the transfer of shares.” The proposal officially opens for a 60-day comment period, giving market participants time to weigh in on operational adjustments.

Under the proposed framework, regulated firms would gain permission to use blockchains as official records of transactions. However, the update also introduces stricter operational controls, particularly regarding cybersecurity standards. The transition addresses challenges faced by traditional record-keeping systems as markets experience a surge in tokenized assets and round-the-clock trading activity.

Digital Wallets and Identity Verification Debate

A central question for the digital asset sector involves how transfer agents verify securityholder identities under the modernized framework. SEC Commissioner Hester Peirce raised this issue in a statement, asking whether firms should still collect names and physical addresses or pivot to alternative identifiers. According to Peirce’s statement, should transfer agents continue to be required to collect names and physical addresses of securityholders or should the rule allow other identifiers, such as email and digital wallet addresses, to be collected instead?