On September 1, 2026, the Securities and Exchange Commission (the SEC or Commission) proposed a comprehensive overhaul of the regulatory framework governing registered transfer agents (the Proposal).¹ Transfer agents play a critical role in the US securities markets by maintaining securityholder records, processing transfers of securities ownership, facilitating the issuance of securities and performing other functions necessary to the national clearance and settlement system. As the markets have evolved, so too has the role of transfer agents, with many providing a broader suite of technology services. The Proposal represents the most significant updates to the transfer agent rules in decades and is intended to modernize the regime to reflect technological advancements that have transformed securities ownership and transfer processing, including the widespread use of electronic recordkeeping systems, distributed ledger technology (DLT), tokenization initiatives and cloud-based infrastructure.²

Notably, the Proposal is technology-neutral: Rather than creating a separate regime for tokenized securities and transfer agents that use DLT, it incorporates DLT-based recordkeeping into the existing transfer agent framework, subject to certain conditions. Notwithstanding this, the Commission expressly frames the rulemaking as a response to firms “actively seeking to bring blockchain-native, or ‘onchain’ transfer agents into the U.S. market,” including through blockchain-based recordkeeping, tokenized fund administration, cross-chain interoperability and smart-contract-driven processes.³ The practical consequences for the digital asset industry are significant. If adopted, DLT-based recordkeeping would gain explicit regulatory recognition through modernized and, in some respects, more demanding operational, safeguarding, compliance and reporting obligations. Comments are due November 3, 2026.

Key Elements of the Proposal

I. Recognition of DLT and Modernization of Core Definitions

a. Master Securityholder File

The most significant aspect of the Proposal is the Commission’s express recognition of blockchain and DLT as permissible components of a transfer agent’s recordkeeping infrastructure. The Proposal would amend the definition of “master securityholder file,” which is the official list of registered owners of an issuer’s stocks and bonds, to require that it be maintained in electronic form while allowing transfer agents flexibility regarding the technology used to maintain that record, so long as the transfer agent maintains at all times exclusive control over the master securityholder file.⁴ The Commission expressly states that a transfer agent could use a blockchain or other DLT as its master securityholder file, or a component thereof, provided that the system satisfies applicable regulatory requirements relating to recordkeeping, accessibility, examination security and control.⁵ That position is consistent with, and would codify, the Staff’s prior guidance on the use of DLT for the master securityholder file.⁶

There are two notable aspects of the amended definition. First, the Proposal does not define “exclusive control” and the release requests comment on: (1) how the requirement should apply to records maintained solely on a blockchain or distributed ledger that the transfer agent does not exclusively control, and (2) whether the rules should permit a transfer agent to associate a wallet address and quantity held with offchain records of the holder’s name and address such that an onchain transfer simultaneously updates the master securityholder file.⁷ Second, the Proposal contemplates that only one recordkeeping transfer agent may maintain the master securityholder file for a given issue.

b. Position Detail

The Proposal also updates other foundational definitions that underpin the transfer agent regulatory framework. Most notably, the SEC would replace the term “certificate detail” under Rule 17ad-9 with the technology-neutral term “position detail” to reflect that most modern securities are held in uncertificated form rather than evidenced by physical certificates.⁸ Position detail represents the current state of a securityholder’s position, while the transfer journal preserves the time-sequenced history of changes to that position. The Proposal would amend the “record difference” category that applies when the two positions disagree.⁹ For transfer agents using DLT, the amendments may raise questions regarding how current ownership records and transaction histories are maintained, reconciled and reviewed under the amended framework.

c. Item

The Commission proposes to broaden the definition of “item” under Rule 17ad-1, which is a term that traditionally refers to physical securities certificates, to encompass instructions relating to uncertificated securities and electronic transfer processes. The definition would reach instructions transmitted by or through an “electronic system controlled, operated, or enabled by the transfer agent.”¹⁰ This language is intended to capture instructions transmitted through blockchains and other DLT-based platforms, as well as technologies not yet developed.¹¹ This means that a transfer instruction initiated by a smart contract or signed by a wallet that is processed through a transfer agent’s system would constitute an “item” and therefore be counted for the purposes of the turnaround, processing, recordkeeping and reporting rules discussed below. These amendments are designed to ensure that modern communication channels, electronic instructions and emerging technologies used in transfer processing are clearly contemplated by and permitted under the rules.¹²

d. Securityholder Information

Finally, the Proposal would modernize the securityholder information that must be maintained. The required contact information may include a blockchain wallet address alongside other modern identifiers such as an email address or a mobile telephone number.¹³ A physical mailing address would remain a minimum requirement, however, meaning that a self-custodial wallet address alone would not satisfy the required securityholder contact information. The Commission requests comment on whether modern identifiers could eventually substitute for certain traditional securityholder information.

II. Enhanced Registration and Reporting Requirements, Including New Tokenization Disclosures

The Proposal would expand the information transfer agents must provide on Form TA-1, which transfer agents use to register, and Form TA-2, the annual report filed by registered transfer agents, to capture the scope of modern transfer agent operations. Among other changes, the SEC proposes extending the effective date of Form TA-1 from 30 days to 45 days after filing and requiring transfer agents to amend Form TA-2 within 60 days of discovering that information in a filing was materially inaccurate, incomplete or misleading at the time it was submitted.¹⁴

As proposed, Form TA-2 would include new DLT and tokenization items. It would require a transfer agent to report the number of issues for which the master securityholder file was maintained, in whole or in part, using DLT; to identify the tokenization service providers and distributed ledger platforms it uses (which would be added to the service provider inventory); and to report the number of tokenized issues serviced, separately for issuer-sponsored and third-party sponsored models.¹⁵

There are two notable points regarding these changes. First, the Commission would obtain a structured, firm-level data set on tokenization activity across the industry. Second, because Form TA-2 is a public filing, transfer agents should consider the sensitivity of disclosing platform relationships and tokenized issue counts.

III. New Operational Standards and More-Stringent Performance Requirements 

The SEC proposes amending the transfer processing and turnaround rules contained in Rules 17ad-2 and 17ad-3. Under current Rule 17ad-2, transfer agents not acting as outside registrars must turn around at least 90% of all “routine items” within three business days of receipt, while transfer agents acting as outside registrars must process at least 90% of all items received during a month by either (1) the opening of business on the next business day for items received at or before noon, or (2) noon of the next business day for items received after noon. If a transfer agent fails to meet these performance standards, it must notify the SEC within 10 business days, provide certain turnaround data and explain the reasons for the failure and the steps that have been taken to prevent future failures, among other things. 

The Proposal would also amend Rule 17ad-2 to require transfer agents not acting as outside registrars to establish, maintain and enforce written policies and procedures reasonably designed to ensure that routine items received for transfer are turned around within the shorter of one business day or the time period specified by Rule 15c6-1(a) under the Securities Exchange Act of 1934, which currently provides for a T+1 settlement cycle.¹⁶ Transfer agents acting as outside registrars would likewise be required to establish, maintain and enforce written policies and procedures reasonably designed to ensure that all items are processed within the existing time frames of the rule. The Proposal would essentially replace the existing 90% turnaround and processing requirements with a requirement to have written policies and procedures reasonably designed to ensure compliance with the applicable turnaround and processing deadlines.¹⁷

The Proposal would also strengthen the consequences for operational deficiencies. Under proposed Rule 17ad-3, the threshold that triggers limitations on a transfer agent’s ability to expand activities would increase from a 75% timely-processing standard to a 95% standard, reflecting the SEC’s expectation that modern technology should enable substantially higher processing performance.¹⁸

IV. Safeguarding and Risk Management Requirements

The SEC proposes to transform Rule 17ad-12 from a largely prescriptive safeguarding rule into a comprehensive risk management framework. Under the proposed amendments, transfer agents would be required to establish, maintain and enforce written policies and procedures reasonably designed to safeguard all securities and funds in their custody against theft, loss or misuse and to identify, measure, monitor and mitigate any material risks arising from or associated with their activities and operations.¹⁹ The rule would also require a business continuity plan and the maintenance of a separate bank account for issuer, securityholder and third-party funds. The release identifies, as risks that transfer agents must manage, “blockchain data integrity, security of tokenized securities, and distributed ledger operational models” and notes that the current rules are silent on information security, cybersecurity, disaster recovery and operational risk.²⁰

V. New Compliance Program and Section 5 Gatekeeping Requirements

The SEC proposes new Rule 17ad-30, which would require registered transfer agents to establish, maintain and enforce written policies and procedures reasonably designed to achieve compliance with the federal securities laws and to identify and remediate instances of compliance failures in a timely manner.²¹ The policies and procedures would be subject to review and approval by the board of directors or equivalent governing body on at least an annual basis, which imposes a formal, board-level compliance mandate on the industry.²²

The Proposal would also impose Section 5 gatekeeping obligations on transfer agents with respect to unregistered securities transactions. Proposed Rule 17ad-31 would establish requirements for transfer agents regarding the placement and removal of restrictive legends and would require transfer agents to refrain from facilitating any unregistered securities transactions in violation of Section 5 of the Securities Act of 1933.²³ Transfer agents would be required to establish a reasonable basis for concluding that an unregistered securities transaction may be effected before facilitating such transaction. The proposed rule includes a nonexclusive safe harbor under which a transfer agent may satisfy such requirement by obtaining and relying on an opinion from counsel or by independently determining that the transaction qualifies for an exemption from registration.²⁴

The Proposal contains revisions to the transfer agent recordkeeping framework. The amendments are intended to clarify recordkeeping obligations applicable to uncertificated securities and modernize categories of records that transfer agents must maintain.²⁵ The Commission also proposes to amend Rule 17ad-7 to establish a single, uniform retention period of six years for most transfer agent records and to modernize the provisions governing the use of electronic systems and third parties for recordkeeping.²⁶ Significantly for onchain models, the Commission confirms that a required record may be a digital record, “including records existing on a distributed ledger or blockchain network, provided the other requirements of Rule 17ad-6 and Rule 17ad-7 are met.”²⁷

VII. Lost and Inactive Securityholders

The SEC proposes amendments to Rule 17ad-17 relating to lost and inactive securityholders. The amendments would require notification to inactive securityholders after 18 months of inactivity and would update the rule to account for the use of electronic communications and payments.³⁰ The SEC requests comment on the proposed definition of “inactive securityholder,” including whether it should incorporate any account dormancy or inactivity components.

VIII. Elimination of Legacy Exemptions

The Commission proposes to rescind Rule 17ad-4, which currently exempts certain categories of securities, including limited partnership interests, redeemable securities of registered open-end investment companies and dividend reinvestment plans, from specific turnaround, processing and recordkeeping requirements. Current Rule 17ad-4 also provides relief for certain small transfer agents (exempt transfer agents), including those that during any six consecutive months received fewer than 500 items for transfer and fewer than 500 items for processing. The SEC believes that advances in automation and electronic recordkeeping have largely eliminated the operational burdens that originally justified those exemptions.³¹

Takeaways

The Proposal represents a significant modernization of the transfer agent regulatory framework and would impose enhanced compliance, governance, operational and reporting obligations on registered transfer agents. Most notably, the Proposal formally recognizes the use of DLT within transfer agent operations while simultaneously imposing more robust compliance, safeguarding and performance expectations aligned with technological advances. For the digital asset industry, the accommodation is conditioned on exclusive control, a single recordkeeping transfer agent per issue, reconciliation between present state and history, and legend-equivalent gatekeeping. The conditions may determine how much tokenization activity can be conducted on public, permissionless infrastructure as opposed to permissioned systems.

The Commission has requested comment on 175 questions and has expressly invited comment on the Proposal’s implications for tokenization. Transfer agents, issuers, fund complexes, broker-dealers, tokenization platforms and market participants involved in tokenization initiatives should carefully evaluate the Proposal and consider submitting comments to the Commission.