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Why is the SEC changing the rules?

The SEC has proposed rewriting regulations for transfer agents as blockchain-based recordkeeping systems and tokenized securities become more prominent in U.S. markets. The agency said the current rules do not sufficiently address the new risks created by a more digital and automated market infrastructure.

Under the proposal, recordkeeping, registration, custody and operational processes for transfer agents — the firms that handle the registration, safekeeping and transfer of securities — would be updated. The SEC said the gaps are especially clear in cybersecurity, operational resilience and the protection of investor records and securities.

The agency noted that the framework was last substantially updated in the late 1970s and early 1980s. At that time, the industry largely relied on paper certificates and manual recordkeeping, while today's digital infrastructure creates very different risks.

What new obligations does the proposal include?

Reporting and compliance standards are expanding

The proposal would introduce broader reporting obligations and new compliance standards for transfer agents. The draft rule also includes requirements related to restrictive legends on securities and the use of third-party service providers.

  • Updated recordkeeping and custody procedures
  • Clearer operational standards for transfer activity
  • Compliance rules for third-party service providers
  • Additional oversight of digital-infrastructure risks

The SEC will seek public comment. The comment period will last 60 days after the proposal is published in the Federal Register.

Possible impact on crypto and tokenized markets

The proposal could create a clearer regulatory foundation in the U.S. market for transfer agents operating on blockchain. The SEC pointed to growing market interest in blockchain-based recordkeeping models, tokenized fund administration and cross-chain interoperability.

The move also fits into the agency's broader regulatory agenda in recent months. In May, the SEC proposed three major changes to rules for public companies, and last week it sent a broad overhaul of custody rules for investment advisers and investment companies to the White House for review. The process is being closely watched by the crypto market because it could establish clearer standards for how digital assets are held in line with federal securities rules.

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