The S. Securities and Exchange Commission (SEC) has proposed its first major overhaul of transfer agent rules in more than four decades, a move designed to bring the regulatory framework in line with the growing use of blockchain recordkeeping, tokenized securities, and automated systems in regulated S. markets.
Transfer agents are entities that maintain an issuer’s official ownership records, register securities transfers, and monitor whether a company issues more securities than authorized. Many also process dividends, interest payments, fund redemptions, and other corporate actions.
The SEC said in its proposed rule that 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. According to the regulator, market participants are actively seeking to bring blockchain-native, or “onchain,” transfer agents into the S. market. The agency pointed to systems built around distributed or blockchain-based recordkeeping, tokenized fund administration, and cross-chain interoperability as examples where existing rules may fall short.
Key elements of the proposal
The proposal would update rules covering transfer-agent registration, reporting, recordkeeping, processing times, and the protection of securities and client funds. It also introduces requirements for restrictive legends, paying-agent activity, and the oversight of third-party service providers.
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.
Changes to Rule 17ad-12 would replace requirements centered on physical certificates with a risk-management framework covering paper and uncertificated securities. The framework would require firms to identify, monitor, and reduce material custody, operational, and cybersecurity risks. 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. Each transfer agent would need written procedures for events that could disrupt operations.
The SEC said the rule package would expand reporting requirements and introduce new compliance standards, including requirements tied to restrictive legends and third-party service providers.
Industry context and data
The proposal includes data showing that of 253 transfer agents that submitted Form TA-2 for the 2025 reporting year, 152 acted as recordkeeping transfer agents, and 126 provided paying-agent services. Transfer agents distributed about $5 trillion in dividends and interest payments during the year. SEC data also show that 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.
In July, two transfer-agent groups—Continental Stock Transfer & Trust Company and the Securities Transfer Association—warned the SEC that tokens created without an issuer’s approval may not provide the same ownership rights as issuer-backed shares. They asked the regulator to distinguish securities tokenized by an issuer from products created by unrelated platforms. Restrictive legends present another recordkeeping issue addressed by the SEC proposal.
Other recent developments in the digital asset space include Injective Institutional Services securing transfer-agent registration in August, and Superstate registering its blockchain-based transfer agent in March 2025. Intercontinental Exchange agreed in August to invest in tZERO and use its blockchain patents, though the planned platform still needs regulatory approvals before it can begin round-the-clock trading.
Broader SEC modernization efforts
The transfer agent proposal is part of a wider SEC effort to update securities rules for digital and automated markets. On Aug. 25, the SEC sent proposed custody-rule changes to the White House Office of Management and Budget for review. In May, the regulator proposed allowing domestic public companies to replace three quarterly Form 10-Q reports with one semiannual Form 10-S.
Law firm Cahill Gordon & Reindel, in an analysis, stated that the SEC has been “on a mission to simplify its rules.”
Next steps
None of the transfer-agent amendments is final. Interested parties will have 60 days from the proposal’s publication in the Federal Register to submit comments.