SEC Proposes Blockchain‑Based Transfer Agent Rules as CFTC Fines Swaps Trader for Deleting Messages

The U.S. Securities and Exchange Commission (SEC) released a proposal to modernize transfer‑agent regulations, explicitly acknowledging the use of electronic communications and blockchain technology for recording share ownership. The same day, the Commodity Futures Trading Commission (CFTC) settled a case against a swaps trader who deleted messages that regulators had ordered him to preserve.

SEC proposal to allow on‑chain share records

Transfer agents maintain the master security‑holder file for public companies, a legal record of who owns each share. The SEC’s new package amends existing rules, rescinds one outdated rule, and adds several new provisions aimed at reflecting current industry practices, including the use of blockchain for securities offerings and share transfers.

Commissioner Hester Peirce noted that the proposal has been in development for more than a decade, and the SEC is seeking public comment on its implications, including for tokenization of securities.

Industry firms such as Securitize, Computershare, and Equiniti have already begun work related to blockchain‑based record‑keeping. The proposal would require registrars to disclose which securities they tokenize and the blockchain networks used.

CFTC fines swaps trader for destroying communications

The CFTC entered a consent order against John Patrick Gorman III, a U.S. dollar swaps trader and managing director at a global investment bank. Enforcement staff had instructed Gorman in March 2019 to preserve certain documents, but he deleted WhatsApp threads and a text message, later claiming he had not destroyed any evidence.

The CFTC fined Gorman $90,000 and permanently barred him from repeating the conduct, emphasizing that attempts to impede investigations undermine the agency’s enforcement capabilities.

Implications

The SEC’s proposal highlights a regulatory shift toward recognizing blockchain as a potential official ledger for equity ownership, which could reduce reliance on paper‑based or proprietary electronic records. Conversely, the CFTC case underscores the continued importance of traditional record‑keeping and the consequences of non‑compliance, even as regulators explore blockchain solutions.