SEC unveils comprehensive modernization of transfer agent regulations with blockchain recognition
The regulatory proposal seeks to bring decades-old regulations into the modern era, tackling distributed ledger-based record systems, tokenized securities offerings and the growing automation of market systems.
The United States Securities and Exchange Commission (SEC) has put forward a comprehensive plan to modernize longstanding regulations that govern transfer agents, responding to the growing adoption of distributed ledger technology for recordkeeping and the emergence of tokenized securities in American financial markets.
The regulatory package seeks to refresh existing requirements related to registration procedures, record maintenance, asset protection and securities transfer processes, while simultaneously establishing new regulations designed to mitigate risks arising from the increasingly digitized and automated nature of market operations.
"Market participants are actively seeking to bring blockchain-native, or 'onchain' transfer agents into the U.S. market," the SEC said, highlighting frameworks for distributed ledger-based record maintenance, tokenized fund management and cross-chain interoperability.
The regulatory body indicated that its current framework fails to sufficiently address these technological advancements, especially hazards related to cybersecurity threats, operational stability and the protection of both securities and investor data.
According to the proposal, transfer agents would be subject to broadened reporting obligations and additional compliance benchmarks, including regulations that govern restrictive legends placed on securities and the engagement of third-party service providers.
The SEC noted that its transfer agent regulations have remained largely unchanged in any meaningful way since the late 1970s and early 1980s, an era when the financial services sector continued to depend substantially on physical paper certificates and hand-processed recordkeeping systems.
The regulatory authority is now soliciting public feedback on the proposed modifications, establishing a deadline of 60 days following the proposal's publication in the Federal Register for comments to be submitted.
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