US SEC Proposes Updating Transfer Agent Rules; Wall Street Needs to Avoid a 'Paperwork Crisis' in the Blockchain Era

BlockBeats news, September 30: The U.S. SEC proposed on September 1 its first major update to transfer agent rules since the late 1970s, explicitly taking into consideration the use of blockchain technology by transfer agents in securities issuance and share transfers. This is not a blanket endorsement of tokenization, but rather an acknowledgment of blockchain's role in securities registration.

If ownership data exists separately in token wrappers, special purpose vehicles, broker-dealer internal ledgers, and transfer agents' off-chain databases, the market could repeat the "paperwork crisis" of the 1960s. He believes that the token itself should become the official registration record of the security, rather than merely serving as a digital wrapper for off-chain securities.

Fairmint recommends that the SEC require filings to distinguish between native on-chain registration and third-party wrapper models, allow the use of modern identification methods such as digital identities, cryptographic credentials, and wallets, and recognize compliance restrictions enforced through smart contracts. Public blockchains can become official records, but wallet addresses cannot replace regulated transfer agents.