SEC modernises rules for tokenised securities on blockchain

The US securities watchdog SEC proposes new rules that would allow transfer agents to use blockchain as an official register for securities. The proposed update, announced on Tuesday, is aimed at modernising decades-old regulations to account for tokenised securities and blockchain technology.

In brief:

• Transfer agents would be allowed to use blockchain as an official ownership register for securities
• Companies would be required to report how many tokenised securities they manage and which blockchains they use
• The comment period will run for 60 days following publication in the Federal Register

Important step towards an on-chain securities market

The SEC proposes the first substantial overhaul of the rules for registered transfer agents since the late 1970s. Transfer agents are crucial because they record and manage ownership of securities.

SEC Chairman Paul S. Atkins said the proposal “will streamline and modernise the rules to reflect the current processes and operations of transfer agents, including the use of electronic communication and blockchain technology in securities offerings and share transfers.”

The proposal marks a further step in the SEC’s broader efforts to bring US securities markets onto the blockchain, following initiatives such as the collaboration between ICE and tZERO on tokenised securities platforms.

What will change?

Under the new rules, transfer agents would be required to report how many tokenised securities they manage and on which blockchain platforms they operate. This will give regulators insight into how quickly these new markets are growing and which technological standards are taking hold.

The proposed rules will amend existing rules, rescind one rule and introduce new rules specifically for registered transfer agents and their activities.

Jamie Selway, director of the SEC’s Division of Trading and Markets, added: “As technology changes and the competitive market evolves, good governance requires that we review outdated regulations. This proposal is an important step in Chairman Atkins’ efforts to adapt our regulatory framework for the modern era.”

What are the next steps?

The proposal will be published in the Federal Register and will open a 60-day public comment period. This gives market participants, legal experts and crypto companies the opportunity to provide feedback on the new rules.

The modernisation of transfer agent rules aligns with broader SEC policy under Chairman Atkins, aimed at eliminating outdated regulations that no longer match technological realities.