SEC Proposes First Overhaul of Transfer-Agent Rules Since Late 1970s, Formally Embracing Blockchain

The SEC proposed the first substantive overhaul of transfer-agent rules since the late 1970s and early 1980s on September 1, explicitly modernizing them to accommodate distributed-ledger technology and onchain securities settlement. The move formalizes what has been a legal gray zone for blockchain-based share registers, transforming nonbinding staff guidance into binding regulatory framework.

SEC Chair Paul Atkins stated 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." Commissioners Hester Peirce and Mark Uyeda also approved the proposal.

Amendations to Rules 17ad-6 and 17ad-7 would establish a single retention period for most transfer-agent records and modernize provisions governing electronic systems and third-party recordkeepers, per The Defiant's reporting. Amendments to Rules 17ad-1 and 17ad-9 would update terminology to reflect contemporary electronic recordkeeping and communications technology. A rewritten Rule 17ad-12 would require transfer agents to maintain written policies designed to safeguard securities and funds and to identify, measure, monitor and mitigate material risks from their operations. Under the same rule, transfer agents would need a business continuity plan and a separate bank account for issuer, securityholder and third-party funds. Proposed Rule 17ad-30 would separately require written compliance policies and procedures.

The proposing release identifies blockchain data integrity, the security of tokenized securities and distributed-ledger operating models as risks transfer agents must manage. The SEC noted current rules are silent on information security, cybersecurity, disaster recovery and operational risk despite the industry's use of connected and automated systems. New Form TA-2 questions would require agents to report how many share registers they keep on distributed ledgers.

In May 2025, the SEC's Division of Trading and Markets issued a nonbinding staff FAQ stating a registered transfer agent could use distributed-ledger technology as all or part of its official master securityholder file if it complied with existing federal securities requirements. The May 2025 FAQ stated a transfer agent would not need to keep an exclusively offchain duplicate of the master file, and transaction details such as wallet addresses, balances and transaction IDs could be maintained onchain while names, tax identifiers and other private information remained in proprietary offchain systems. Commissioner Peirce asked whether future rules should allow identifiers such as email and digital wallet addresses instead of requiring names and physical addresses.

The public comment period will remain open for 60 days after the date of publication in the Federal Register, per the SEC press release.