Currently, tokenized stocks have two registries: blockchain-based data and a separate official shareholder list maintained off-chain. From a legal standpoint, it is the second registry that carries weight, even if the on-chain data is more recent.
The SEC has proposed updating regulations for transfer agents, which have been in place for half a century, and allowing blockchain to become the primary registry. This would eliminate the need to maintain and reconcile two separate lists. According to lawyers, currently, in the event of an issuer’s bankruptcy, discrepancies between the two registries would lead to complete chaos.
This won’t grant full freedom of circulation: identity verification and restrictions on transfers will remain embedded within the token. Moreover, requirements for transfer agents themselves will increase; they aim to reduce the processing time for requests such as inheritance—from three to five days down to just one day.
The discussion will last 60 days, until early November.