An awkward challenge persists for businesses bringing equities onto a blockchain: while onchain ledgers show token ownership, the formal legal shareholder register exists elsewhere.
Consequently, when deciding which system of record constitutes the legal registry for these tokenized equities, legal counsel typically favors the non-blockchain database, even when the digital ledger holds fresher information.
That dynamic could shift following an SEC proposal unveiled last week, which seeks to modernize five decades-old transfer agent regulations and explicitly permit electronic databases—including blockchain ledgers—to function as official securities ownership records for the first time.
This development represents a major milestone.
Approval of the measure would allow a blockchain to operate as the primary master security file, supplanting the parallel offchain ownership registries that tokenized financial instruments frequently depend on today.
In short, distributed ledger technology would transition from a secondary layer on top of market architecture into a legally recognized structural component itself.
“The master securityholder file used to be paper in a filing cabinet,” explained Joris Delanoue, CEO of Fairmint, an SEC-registered onchain transfer agent. “Today it is a database. The proposal recognizes that blockchain can be that database, not merely a copy of it.”
Why it matters
At present, numerous tokenized financial assets operate across dual registries: the onchain token ledger and the official stockholder register.
Should the proposal pass, enabling blockchains to serve as definitive registers, issuers and transfer agents might eliminate the need to maintain duplicate databases and reconcile them following every transaction.
Such a shift could mitigate operational friction and lower the probability of discrepancies between onchain logs and legally binding ownership registries.
Eli Cohen, chief legal officer at fund tokenization platform Centrifuge, noted that the initiative could transform the existing dual-ledger framework into “a one-step process,” positioning the blockchain itself as the master security file.
This matters because the prevailing two-step system introduces inefficiencies alongside significant legal vulnerability, particularly during catastrophic scenarios.
“If there was an insolvency or a bankruptcy, there would be just a mess,” Cohen stated.
Transfer agents got some homework to do
Certain conditions apply, however.
The regulation does not imply that tokenized assets will become entirely permissionless. While the underlying blockchain network can stay open, Delanoue observed, assets must continue complying with established compliance parameters regarding eligible holders and transfer procedures.
Practically speaking, this means a public network can record ownership while identity checks, transfer limits, and other regulatory safeguards remain embedded directly within the tokens.
Furthermore, the initiative establishes higher standards for entities functioning as transfer agents.
Digital transfer operators will still be responsible for the less glamorous administrative aspects of asset ownership, such as processing deceased shareholder accounts, inheritances, legal notices, mailing addresses, transfer constraints, and error resolution.
Certain operational workflows remain stubbornly physical, including the management of incoming postal correspondence.
Organizations must receive, open, process, and respond to mailed documentation according to strict protocols, Delanoue emphasized, adding that while current processing timelines span three to five days, the framework could shorten this window to a single day.
This factor is critical for tokenization providers that have recently acquired transfer agent entities or secured licenses to expand deeper into regulated market infrastructure; possessing smart contracts alone will prove insufficient, requiring personnel, systems, and controls capable of processing these demands swiftly and dependably, he added.
“There is no more free lunch,” Delanoue remarked. “If you want to maintain the official ownership record, you have to operate the full transfer-agent function.”
Consequently, Cohen suggested that certain enterprises might conclude that managing comprehensive transfer agent operations is more burdensome than anticipated, opting instead to collaborate with established vendors for specific workflow segments.
Looking ahead, a 60-day public comment period runs through early November regarding the agency’s initiative.
Market participants should anticipate numerous submissions from both traditional institutions and blockchain-native organizations, Cohen observed.
Originally published at https://www.coindesk.com/business/2026/09/10/why-a-new-sec-plan-could-end-the-legal-headaches-of-holding-tokenized-securities.
