SEC Proposes Transfer Agent Rule Overhaul for Blockchain

The U.S. Securities and Exchange Commission (SEC) proposed a broad update to the rules governing transfer agents on September 1, 2026, marking the first major revision to the framework since the late 1970s and early 1980s.

The proposal matters because transfer agents maintain the official ownership records for US securities, process changes to those records, and handle tasks such as dividend distributions. Roughly 273 registered transfer agents currently operate in the United States, and their responsibilities have expanded well beyond what the existing rules anticipated when they were written.

The proposed changes would update requirements covering registration, recordkeeping, transfer processing, and the safeguarding of client assets. The package would also amend several existing rules and forms, rescind one rule, and introduce new requirements covering restrictive legends, paying-agent activity, and oversight of third-party technology providers.

What's The Plan?

A central part of the proposal addresses how transfer agents should handle securities that move onchain. The SEC said market participants are increasingly looking to bring blockchain-native transfer agents into the US market, citing emerging models for blockchain-based recordkeeping, tokenized fund administration, and cross-chain interoperability.

Proposed Rule 17ad-31 would set stricter standards for restrictive legends on securities. For tokenized securities, the SEC is asking whether transfer restrictions could be enforced directly through smart contract logic rather than through the paper-based legend system transfer agents have historically relied on.

The regulator is also seeking public comment on how digital wallets should be treated compared with traditional physical addresses, what fraud risks emerge from onchain transactions, and how a blockchain-based ownership register should interact with the official record a transfer agent maintains.

"Good government requires revisiting legacy rules and regulations," said Jamie Selway, director of the SEC's Division of Trading and Markets. The proposal follows a period in which America's most consequential crypto legislation, the CLARITY Act, has moved closer to passage, part of a broader push in Washington to build regulatory clarity around digital assets.

Once published in the Federal Register, the proposal will be open to public comment for 60 days. The SEC will review those comments before finalizing any changes, and the existing transfer agent rules remain in effect throughout the process.

The proposal does not create a standalone regulatory category for onchain transfer agents. Instead, it opens a formal comment process that will shape how the SEC eventually treats blockchain-based recordkeeping within the existing transfer agent framework, echoing moves elsewhere such as Japan's study of round-the-clock blockchain settlement for stocks and bonds.