SEC Proposes Transfer Agent Rules for Blockchain-Based Share Records

The U.S. Securities and Exchange Commission (SEC) issued a proposal on September 1 to modernize its transfer‑agent rules, explicitly addressing electronic and blockchain‑based share records. The changes would apply to registered transfer agents, including firms that tokenize securities.

Key Rule Amendments

The SEC plans to amend Rules 17ad‑6 and 17ad‑7 to create a uniform retention period for most transfer‑agent records and to update provisions governing electronic systems and third‑party recordkeepers. Rules 17ad‑1 and 17ad‑9 would be revised to reflect contemporary electronic recordkeeping terminology.

New Risk‑Management Requirements

Under a rewritten Rule 17ad‑12, transfer agents would be required to adopt written policies that safeguard securities and funds, identify material risks, and implement mitigation measures. They would also need a business‑continuity plan and a separate bank account for issuer, security‑holder, and third‑party funds. Proposed Rule 17ad‑30 would add a requirement for written compliance policies and procedures.

Focus on Distributed‑Ledger Risks

The proposal highlights specific risks associated with blockchain‑based registries, including data integrity, security of tokenized securities, and operational risks of distributed‑ledger models. The SEC notes that existing rules do not address information security, cybersecurity, disaster recovery, or operational risk for such systems.

Background and Next Steps

The proposal follows a non‑binding May 2025 staff FAQ that indicated a registered transfer agent could use distributed‑ledger technology for its master security‑holder file, provided it meets existing federal securities requirements. The FAQ clarified that on‑chain data could include transaction details, while personally identifying information would remain off‑chain.

Commissioners Paul Atkins, Hester Peirce, and Mark Uyeda approved the proposal. It is not yet effective; a 60‑day public comment period will begin after publication in the Federal Register.