The American financial regulator has proposed a sweeping update to industry rules. The Securities Commission is revising requirements for transfer agents. The current regulations have not been updated since the early 1980s. The new proposal accounts for electronic recordkeeping and blockchain technology. Commission Chair Paul Atkins stated that modernization is necessary. The rules should reflect the current operations of registered transfer agents. The regulator is taking into account the use of electronic communications in share transfers. As of June 30, three hundred twenty-seven agents are registered. For the majority of them, this Commission serves as the primary regulator.
The proposal directly addresses the use of distributed ledger technology. The proposed changes will affect the special reporting form TA-2. Agents will be required to report the number of issuances on blockchain. Companies will disclose the names of tokenization providers and DLT platforms. Reporting will distinguish between issuer-initiated and third-party-initiated models. The changes allow for recording the digital wallet address of the owner. Commissioner Hester Peirce noted a shift in the role of agents. Securities are gradually moving to an on-chain format. The regulator invited participants to discuss modern owner identifiers. Email may replace certain traditional details.
The Commission also proposed updating form TA-1. The regulator plans to fully repeal Rule 17ad-4. This rule contained exemptions for processing certain transactions. The exemptions covered limited partnership interests and fund units. New Rule 17ad-30 will require agents to develop policies. Companies must maintain procedures for compliance with federal law. The board of directors will review these documents on an annual basis. Rule 17ad-31 will establish requirements for restrictive notations. Agents will be prohibited from facilitating unregistered market transactions. The Commission put forward an initiative to expand risk management. The new requirements will address the protection of assets and business continuity.
In May, Hester Peirce made an important statement for the industry. The Commissioner urged restraint in expectations regarding innovation exemptions. The regulator does not plan to permit the issuance of synthetic assets. The trading of tokenized stocks will receive clear legal boundaries. The market is gradually adapting to new operating conditions. Digital technologies are steadily integrating into the traditional financial system.