The SEC wants blockchain to serve as the official shareholder recordand that’s a major turning point.
Why a new SEC plan could ease a legal headache for tokenized securities
The SEC's new proposal to overhaul transfer-agent rules could eliminate duplicate offchain shareholder records, reducing reconciliation costs and legal uncertainty for tokenized securities.
There is an awkward problem for companies putting stocks on a blockchain: The onchain data can show who owns the token, but the legal shareholder record sits somewhere else.
So when it comes to which database to consider as the legal record for these tokenized stocks, lawyers currently pick the one that isn't on the blockchain, even if the actual data is more up to date on the digital ledger.
But that might all change now after the SEC put forward a new proposal last week that would overhaul five decades-old transfer-agent rules and, for the first time, explicitly allow electronic databases, including blockchain ledgers, to serve as the official record of securities ownership.
And this is a big deal.
If approved, a blockchain could become the "master security file," replacing the parallel offchain ownership records that tokenized securities often still rely on today.
Put simply, blockchain would move from being a technology layered on top of market infrastructure to potentially becoming part of the legally recognized infrastructure itself.
"The master securityholder file used to be paper in a filing cabinet," said Joris Delanoue, CEO of SEC-registered onchain transfer agent Fairmint. "Today it is a database. The proposal recognizes that blockchain can be that database, not merely a copy of it."
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