SEC Proposes Rules Recognizing Blockchain-Based Equity Settlement
The proposal would allow transfer agents to use distributed ledgers to record and transfer securities while addressing fragmented ownership records.
The U.S. Securities and Exchange Commission proposed major revisions to transfer-agent rules on Sept. 1 that would recognize blockchain-based systems for recording and settling equity securities.
The proposal would allow transfer agents to use distributed ledger technology to record ownership and transfer securities. It marks the SEC’s first major transfer-agent rule revision since the 1970s, placing blockchain-based recordkeeping within the framework governing securities registration and settlement.
The rules would also address the risk of fragmented ownership data when tokenized securities, special-purpose vehicles, broker-dealer internal ledgers and offline databases operate alongside one another. The proposal emphasizes the need to avoid competing records that show different ownership information.
The proposal could provide a regulatory framework for on-chain equity records while requiring systems to avoid conflicting ownership data.
