SEC proposes new standards for US transfer agents

The SEC has proposed overhauling rules governing US transfer agents. The proposal addresses blockchain-based recordkeeping and tokenized securities. It would update registration requirements. It would update recordkeeping requirements. It would update safeguards for securities and investor records. It would update requirements for securities transfers. The SEC said market participants are seeking to bring blockchain-native transfer agents into the US market. The agency cited blockchain-based recordkeeping, tokenized fund administration and cross-chain interoperability. The SEC said its current framework does not adequately address cybersecurity, operational resilience and the safeguarding of securities and investor records. The proposal would expand reporting requirements. It would create compliance standards for restrictive legends on securities. It would create compliance standards for third-party service providers. The SEC said its transfer agent rules have not been substantively updated since the late 1970s and early 1980s. The agency is seeking public comment. Comments would be due 60 days after publication in the Federal Register. Cahill Gordon & Reindel said in an analysis sent to clients that the SEC is seeking to simplify its rules. In May, the SEC proposed allowing public companies to choose semiannual reporting. The SEC also proposed simplifying the filer classification system. The SEC proposed expanding access to streamlined registered securities offerings. Last week, the SEC sent a proposed overhaul of custody rules for investment advisers and investment companies to the White House for review. The potential changes would cover how firms hold crypto assets for clients. They could provide clearer standards for custodianship of digital assets under federal securities rules.