SEC official signals transfer agent role in tokenized stock trading venues
A speech by the SEC's Division of Trading and Markets director to the Securities Transfer Association lays out how the agency's recently approved tokenized securities exemption and pending transfer agent rule modernization intersect. Compliance teams at transfer agents and issuers exploring tokenization should note the specific conditions attached to the exemption and the open questions on digital identifiers and escheatment.
- The SEC approved the Innovation Exemption on September 17, a five-year conditional exemption from the 'exchange' definition for Tokenized Securities Venues (TSVs).
- TSVs must be U.S. persons, operate on public permissionless blockchains, and are subject to volume limits, among other conditions.
- Any tokenized NMS stock traded on a TSV must carry all the same rights and privileges as the underlying security.
- Commissioner Hester Peirce posed four public feedback questions on the transfer agent rule proposal, including whether transfer agents should be allowed to use digital identifiers like email or wallet address instead of name and physical address.
- The SEC is seeking feedback, particularly empirical data on costs and benefits, on its proposal to modernize transfer agent rules.