SEC proposal allows blockchain to be used as official securities ledger

The U.S. Securities and Exchange Commission (SEC) has proposed replacing old transfer agency rules with blockchain ledgers

The U.S. Securities and Exchange Commission (SEC) has proposed a new proposal to replace decades-old transfer agency rules with a new regulatory framework. The framework will formally recognize blockchain ledgers as official records of securities ownership.

Summary of Core Points

• Blockchain databases may become legally recognized ownership records of tokenized securities.
• Issuers may no longer need to maintain two separate systems of on-chain records and official shareholder registers.
• Measures such as identity verification and transfer restrictions will continue to apply for blockchain-based securities.
• The SEC has begun a 60-day public comment period that is expected to end in early November.

Eliminate duplicate ownership records

The SEC said its proposed transfer agent reform plan would recognize electronic databases, including distributed ledgers, as a vehicle for holding official ownership records of securities. The change will update old rules that were put in place before blockchain-based securities entered U.S. capital markets.

In many current tokenization models, on-chain tokens are not the final legal ownership record. Instead, transfer agents and issuers maintain separate shareholder registers outside of the blockchain, while digital tokens only track transfers on the chain. Operating both systems requires parties to check their data after a transaction. If there are differences between the blockchain ledger and a legally recognized register, it may lead to uncertainty about the ownership of the underlying securities.

Under the SEC proposal, eligible blockchain ledgers would become the primary ownership record rather than a parallel database. Transfer agents can use the ledger to register holders and record changes without having to recreate every transaction in other systems. Eli Cohen, chief legal officer of Tokenized Fund platform Centrfuge, pointed out that the plan could simplify the existing "two-step" model into a "one-step" process. In his assessment, once the rules allow it, the blockchain itself could serve as a master security-holder file.

It should be noted that this is still a proposal and will not automatically approve every blockchain network or token structure for official record-keeping. Transfer agencies operating using the technology will still need to meet SEC regulations on registration, record accuracy, asset protection and regulatory reporting.

Blockchain records do not mean that securities can be transferred without a license

Although public blockchains allow anyone to view their transaction history, securities recorded on it will still be subject to U.S. ownership and transfer rules. Joris Delanoue, CEO of Registered On-Chain Transfer Agent Fairmint, said compliance controls will remain in the operating structure of the assets. Tokenized securities may require identity verification, investor qualification checks, and restrictions on transfers to unapproved wallets.

Transfer agencies remain responsible for maintaining accurate ownership information and handling operations that cannot be accomplished through ordinary token transfers. Such responsibilities include handling succession matters, responding to legal notices, and updating records after the death of a shareholder. Delanoue pointed out that blockchain-based processing could shorten the time required for certain administrative operations from three to five days to about one day. Although technology has changed the way ownership orders are recorded and processed, it has not relieved transfer agencies of their legal responsibilities.

Smart contracts can also enforce certain restrictions before transactions reach the ledger. Depending on the security and the terms of its issue, the transfer may be blocked if the wallet does not complete necessary inspections or the recipient is not allowed to hold the asset. For U.S. investors, this distinction distinguishes regulated tokenized securities from crypto assets that can flow freely between wallets. A blockchain entry may become an official ownership record, but the owner will still have to meet the rules associated with the security.

Tokenized securities are expected to achieve a single ownership data source

Based on Cohen's assessment of the proposal, allowing one ledger to serve as an official registry could eliminate the need to coordinate two ownership databases after each transfer. Currently, transfer agencies not only record transactions, but also perform multiple functions. The SEC's investor guide states that they track ownership changes, maintain issuer records, and distribute dividends and other payments to registered holders.

Using blockchain as the primary record allows transaction history and legally recognized shareholder lists to be placed in the same system. However, issuers and transfer agents still need to have controls in place to correct errors, respond to court orders, and restore access if investors lose the credentials they need to control their wallets. The SEC's proposal also raises questions about the operation of books that are not solely controlled by transfer agents. Before the committee decides whether to revise the text and adopt final rules, its rulemaking process seeks public input. Therefore, the role of blockchain as an official ledger will depend on the requirements included in any final version. Record integrity, network security, access control and the ability to handle changes to legal requirements remain at the core of transfer agencies 'work.

Institutional projects have built regulated services around similar controls

Institutional projects have built regulated services around similar controls. Cosmos has reportedly formed a partner network of 17 companies covering the custody, compliance, security and infrastructure of banks using its tokenization system. Eran Barak, chief commercial officer of Cosmos, said banks using the network must choose their own service providers, sign separate agreements, and take responsibility for compliance decisions. According to Barak, Wells Fargo plans to use Cosmos ledger technology for its first cross-border tokenized deposit project in the fall of 2026.

SEC rules may shape U.S. stock token model

The transfer agency proposal applies to the records behind regulated securities, not all products that track stock prices. Some stock tokens give users financial exposure to the company but do not include them on the company's official shareholder register. Such products may differ from tokenized shares backed by the issuer, which have ownership rights and appear in records maintained by a registration and transfer agent.

This difference has become a focus of controversy among U.S. companies and trading platforms. Robinhood CEO Vlad Tenev recently rejected AMC's request to stop providing tokens tied to its theater operator's shares, arguing that third-party products do not require the issuer's consent. AMC CEO Adam Aron challenged the tokens because the company had not issued or approved them. Robinhood's products are available outside the United States, and the SEC's proposal involves a regulated record system that supports securities ownership under U.S. law.

Tokenization supported by issuers follows a different structure because digital entries can represent the security itself. If the SEC's transfer agent amendment is adopted, such issuers can more clearly view passage of on-chain entries as a path to control ownership records. The proposal would not remove other securities law obligations related to issuing or trading venues. Registration requirements, investor disclosures, broker-dealer rules and restrictions attached to private securities will continue to depend on product and transaction specifics.

The public consultation period will last for 60 days and is expected to end in early November. The SEC may revise the proposal after reviewing the submissions before deciding whether to vote on the final rule.