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SEC Targets Transfer Agents
The U.S. Securities and Exchange Commission proposed its first major transfer-agent rule overhaul in more than four decades, saying it is needed as blockchain recordkeeping and tokenized securities enter regulated U.S. markets.
“Public comments will remain open for 60 days after Federal Register publication.”
The SEC’s proposal would update registration, recordkeeping, transfer processing, and asset-safeguarding requirements, including controls for onchain transfer agents covering digital records, cybersecurity risks, and business continuity.
The agency said its existing transfer-agent requirements date from the late 1970s and early 1980s, when investors commonly held paper certificates and firms processed ownership changes manually.
In the proposal, the SEC said it would update Rule 17ad-7 to require controls protecting integrity, availability, reproducibility, redundancy, and continuity of records for transfer agents using electronic recordkeeping systems.
The SEC also said public comments would remain open for 60 days after Federal Register publication.
Cybersecurity and Safeguards
The SEC said its existing framework does not fully address information security, cybersecurity, disaster recovery or the operational risks created by connected systems as securities records move away from paper.
Under proposed amendments to Rule 17ad-7, transfer agents using electronic recordkeeping systems would need controls protecting records against unauthorized alteration, deletion, or destruction, and an audit trail identifying who accessed, changed, or deleted a record.
The SEC also proposed changes to Rule 17ad-12 that would replace requirements centered on physical certificates with a risk-management framework covering paper and uncertificated securities.
Registered transfer agents would have to adopt written policies designed to protect securities and funds from theft, loss, misuse, damage, destruction, and unauthorized access, and the SEC said client and issuer funds held by a transfer agent would need to remain in a separate bank account designated as a “for the benefit of” account.
The SEC said the proposal is technology-neutral and would not prescribe one type of database or require transfer agents to adopt distributed ledgers.
Onchain Momentum, Tokenization
The SEC said it is seeing momentum toward blockchain-native, or “onchain,” transfer-agent models, stating, “Market participants are actively seeking to bring blockchain-native, or ‘onchain,’ transfer agents into the U.S. market.”
““Market participants are actively seeking to bring blockchain-native, or ‘onchain,’ transfer agents into the U.S. market,””
The SEC’s proposal also said such models may require transfer agents to store shareholder information on distributed ledgers and manage processes run through smart contracts, while still keeping transfer agents within federal securities laws.
The agency pointed to recent registrations, including Injective Institutional Services securing transfer-agent registration in August and Superstate registering its blockchain-based transfer agent in March 2025 to support tokenized funds.
The Guardian reported that European fashion retailers are facing fresh questions over supply chain oversight after a fire at a factory that supplied them killed at least 33 garment workers in Bangladesh, but the SEC proposal’s implications for tokenized securities were framed in the same coverage as a regulatory shift.
CryptoRank said the SEC opened a public comment period and that a final rule could take several months, while also describing the proposal as a move that could reduce regulatory uncertainty and encourage mainstream adoption of tokenized securities.