Yesterday the SEC published proposals to overhaul transfer agent rules, the first substantive rewrite since the early 1980s, with a potentially significant impact on tokenization. Commissioner Peirce flagged a question buried in the 400 plus page document. Can someone who has never provided a name or mailing address be a registered holder of a US security? Or can an email and wallet address suffice?
Today a direct registered shareholder is a name and address on the master securityholder file, the official list maintained by the issuer’s transfer agent. That requires identification and tax information before a potential stockholder can invest. If that same investor wanted to engage in DeFi, these frictions don’t exist. Offshore synthetic tokenized stocks have already adopted the stablecoin model which only requires identification when tokens are minted or burned. This means these securities are traded via DeFi and the token issuers don’t know the names and addresses of many of their investors.
The SEC is probing whether a similar model could be viable onshore, despite not including it in the draft rules. Or not yet. The consultation asked about the viability in several different ways.
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