The Securities and Exchange Commission has proposed its first substantial overhaul of transfer-agent rules since the paper-certificate era, this time addressing blockchain records and tokenized securities.

In the SEC announcement, Chairman Paul Atkins said the changes reflect “the use of electronic communications and blockchain technology in connection with securities offerings and the transfer of shares.”

The proposal does not approve any tokenized-stock platform, and it does not make a wallet balance conclusive proof of share ownership. Instead, it focuses on the systems behind that balance: the records an issuer uses to identify investors and the transfer agents responsible for keeping those records accurate.

That distinction matters because tokenized stocks do not all operate in the same way. Some are intended to represent shares on an issuer-backed register, while others provide an indirect claim linked to securities held elsewhere. In either case, transferring a token and changing the legally recognized owner can be separate events.

One token transfer, two ownership records

A transfer agent works behind the market where an investor buys or sells a security. It maintains the issuer’s official ownership record, processes transfers, and may also support dividends, voting, redemptions, and other corporate actions.

When tokenization is used to represent a share itself, the blockchain record must stay synchronized with the issuer’s master securityholder file.

What happens after a token changes wallets?

An investor sends a tokenized share to another wallet.

The blockchain records the receiving address.

The wallet is linked to the new holder’s identity.

The transfer agent checks whether the transfer can be recorded.

The official ownership file reflects the accepted change.

If the process stops after step two, the recipient may control the token without holding the same legal position as a shareholder recognized by the issuer. That mismatch can become visible later, when the holder expects a dividend, votes, requests a redemption, or tries to transfer the position again.

The SEC’s proposed rules ask how onchain details, including the wallet address, number of securities, and issue date, should connect with offchain information such as the holder’s name and address. The Commission also wants feedback on whether an onchain transfer should require a matching change in the master securityholder file. That is a practical question for market plumbing as much as for blockchain design, because the proposed framework would have to fit into the existing recordkeeping and compliance process rather than replace it outright.

Transfer agents would disclose their blockchain stack

Proposed changes to Form TA-2 would show how registered transfer agents use distributed ledgers in practice. Firms would have to report the number of issues for which blockchain technology maintains all or part of the master securityholder file, along with the tokenized securities they service.

The disclosures would separate issuer-sponsored tokens from products created by third parties. Transfer agents would also identify outside tokenization agents and distributed-ledger platforms involved in their work.

Those details could show whether a blockchain is becoming the official ownership record or remains an additional layer tied to a conventional database. They would also help regulators identify responsibility when several companies participate in issuance, custody, recordkeeping, and token transfers. The proposal accommodates distributed ledgers without requiring issuers or agents to adopt them, which means the reporting changes are aimed at visibility and oversight rather than a mandate to tokenize.

Tokenized stocks do not all carry equal rights

The distinction between issuer-sponsored and third-party tokens is more than a reporting category. An issuer-sponsored token may function as the company’s own digital share record. A third-party product may represent a custodial entitlement, derivative, or contractual claim tied to a conventional security.

Two tokens showing the same stock ticker can therefore leave holders with different voting, dividend, redemption, and insolvency rights. As our examination of Crypto.com’s tokenized stocks explained, tracking the value of a U.S.-listed share does not necessarily make the buyer a direct shareholder of the underlying company.

The proposed disclosures would not make these models equivalent. They could, however, make it easier to see which products connect directly to regulated ownership records and which add another issuer or custodian between the investor and the share. For readers following the segment, that distinction is central to understanding why tokenized assets can look similar on the surface while carrying different legal and operational outcomes.

Wallet identity and restricted transfers

The draft treats a wallet address as one possible identifying detail for a tokenized-security position. It still expects the record to include the holder’s full name and other information needed to identify the registered owner.

Commissioner Hester Peirce, in a separate statement supporting the proposal, asked whether future rules should allow identifiers such as email and wallet addresses instead of continuing to require names and physical addresses. The distinction matters because a wallet identifies where a token sits, not necessarily the person legally entitled to the security.

Identity is only one part of the check. Tokenized securities may carry resale restrictions even when their smart contracts can move freely between compatible wallets. Proposed Rule 17ad-31 would govern how transfer agents place and remove restrictive legends. Before facilitating a transaction, an agent would need a reasonable basis to believe it does not violate federal registration requirements.

That leaves developers with a consequential design choice. A permissioned smart contract can reject an ineligible wallet before the transfer occurs. A less restrictive token can move first, leaving the transfer agent to refuse the corresponding change in the legal register. The second approach preserves more onchain flexibility, but it also creates the risk that the token and the official ownership file will diverge, which is why the proposal puts recordkeeping and identity checks alongside the token mechanics rather than treating the blockchain as a complete substitute.

Blockchain records must survive offchain scrutiny

Even when compliance checks are built into the token, the transfer agent must preserve a record that regulators can inspect independently. Under the proposal, an agent using a third-party electronic or distributed-ledger system would need continuing access to current, complete copies without requiring the provider to intervene.

The transaction may be public, but the chain does not show the verified identity behind the wallet or why the transfer agent accepted or rejected the change. Those records would still need to be retained in an accessible form. The requirement also raises a practical question for permissionless networks: an agent may not control the blockchain, yet it remains accountable for the ownership information drawn from it.

The proposal pairs record access with written safeguards for funds and securities, monitoring of material risks, and business-continuity procedures. Smart contracts and immutable ledgers do not resolve compromised credentials, software defects, or incorrect identity data. Transfer agents would still need a way to preserve operations and reconstruct an accurate register when part of the technology fails.

DTCC is already testing one way to keep a blockchain representation connected to the conventional security behind it. Its regulated infrastructure remains responsible for custody and settlement while blockchain changes how positions are recorded and transferred, as Coindoo covered in its report on DTCC bringing stocks and Treasuries onchain.

The legal source of truth remains unresolved

The proposal improves the SEC’s view of tokenized securities, but it leaves several questions for the rulemaking process:

Can a blockchain become the sole ownership record?

Who corrects an unauthorized onchain transfer?

What happens when a holder loses wallet access?

Should compliance occur before or after transfer?

The SEC’s most consequential question is not whether shares can move onchain, they already can. It is whether the transfer agent remains the legal source of truth when the token, the wallet holder, and the issuer’s records stop matching.

The proposal remains open for public comment and gives tokenized-stock platforms no new approval today. The final rules will determine how much of the existing ownership system can move onto a blockchain and which legal responsibilities remain offchain.