SEC proposes blockchain as official securities ledger

The U.S. Securities and Exchange Commission has proposed replacing decades-old transfer agent rules. The new framework would recognize blockchain ledgers as official securities ownership records. This move updates regulations that predate the entry of blockchain-based securities into U.S. capital markets. The agency has opened a 60-day public comment period ending in early November.

Current tokenization models often require issuers to maintain separate on-chain and official shareholder ledgers. This dual structure creates a two-step verification process. Discrepancies between the blockchain and the legal register can lead to uncertainty over ownership. The proposal aims to eliminate these duplicate records by making the distributed ledger the primary source of truth.

Eliminating Duplicate Ownership Records

Eli Cohen, chief legal officer at Centrifuge, noted the plan could reduce the existing two-step model to a one-step process. Under the proposal, a qualifying blockchain ledger would become the main ownership record. Transfer agents could use this ledger to register holders without recreating transactions in another system. This change would streamline the administrative burden for issuers and agents alike.

The SEC emphasizes that this proposal does not automatically approve every blockchain network. Transfer agents must still meet rules for registration, record accuracy, and asset protection. The technology would serve as the record, but it would not remove the legal responsibilities of the transfer agent. Compliance remains a core requirement for participation in this framework.

Compliance Controls Remain Intact

Blockchain records will not make securities permissionless. Tokenized securities remain subject to U.S. ownership and transfer rules. Joris Delanoue, CEO of Fairmint, stated that compliance controls will still sit inside the asset’s operating structure. Identity verification and investor eligibility checks are mandatory components of this system.

Smart contracts could enforce restrictions before a transaction reaches the ledger. A transfer may be blocked if a wallet has not completed required checks. Recipients who are not allowed to own the asset would also face blocked transactions. This distinguishes regulated tokenized securities from crypto assets that move freely between wallets.

Operational Efficiency and Regulatory Clarity

Blockchain-based processing could reduce administrative processing times from three to five days to about one day. The technology changes how ownership instructions are recorded and processed. Transfer agents remain responsible for handling inheritance and responding to legal notices. This shift focuses on efficiency rather than regulatory exemption.

GN markets/crypto (en-US) reports that this proposal marks a significant step for tokenization. It provides a clearer path for integrating digital assets into traditional financial infrastructure. The final rules will depend on feedback during the comment period. Investors should monitor the development for changes in custody and compliance standards.