The U.S. Securities and Exchange Commission has proposed its first major transfer-agent rule overhaul in more than four decades as blockchain recordkeeping, tokenized securities and automated systems enter regulated U.S. markets. According to the SEC proposal, most of its transfer-agent requirements date from the late 1970s and early 1980s, when investors commonly held paper certificates and firms processed ownership changes manually. The commission stated that market participants are actively seeking to bring blockchain-native, or 'onchain,' transfer agents into the U.S. market. SEC Chairman Paul Atkins emphasized that the proposal would streamline and modernize the Commission's rules to reflect transfer agents' current processes and operations, including the use of electronic communications and blockchain technology in connection with securities offerings and the transfer of shares.
The proposed amendments to Rule 17ad-7 would require transfer agents using electronic recordkeeping systems to install controls protecting the integrity, availability, reproducibility, redundancy, and continuity of their records. Records would need protection against unauthorized alteration, deletion, or destruction, along with an audit trail identifying who accessed, changed, or deleted a record. For regulatory examinations, firms would need systems capable of immediately producing records in both human-readable and reasonably usable electronic formats. The SEC described its approach as technology-neutral, stating the rules would not prescribe one type of database or require transfer agents to adopt distributed ledgers.
Proposed changes to Rule 17ad-12 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. 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, reducing commingling and keeping customer assets outside the firm's general estate during insolvency. Business continuity plans would require written procedures for events that could disrupt operations, including steps for restoring records and resuming responsibilities.
Data included in the proposal shows the scale of regulated activity, with 253 transfer agents submitting Form TA-2 for the 2025 reporting year, of which 152 acted as recordkeeping transfer agents and 126 provided paying-agent services. Together, transfer agents distributed about $5 trillion in dividends and interest payments during the year. 44% of transfer agents either used a service company for at least part of their work or provided services to another transfer agent in 2025. Recent registrations include Injective Institutional Services securing transfer-agent registration in August and Superstate registering its blockchain-based transfer agent in March 2025 to support tokenized funds.
For U.S. investors, a token's presence on a blockchain does not by itself determine who legally owns the underlying security, as transfer agents remain responsible for the official shareholder register. Two transfer-agent groups warned the SEC in July that tokens created without an issuer's approval may not provide the same ownership rights as issuer-backed shares. The proposed framework would require written policies for handling legend-removal requests and related documentation. Traditional market operators are building systems that depend on the same transfer-agent functions covered by the proposal, with Intercontinental Exchange agreeing to invest in tZERO for developing infrastructure for an NYSE-affiliated tokenized securities platform. tZERO and Intercontinental Exchange (ICE) agreed to work together on Monday for infrastructure development, with tZERO helping build digital transfer agent and broker-dealer systems for ICE's planned tokenized securities platform linked to the New York Stock Exchange.
