In May I wrote about Bullish paying $4.2 billion for Equiniti, and the argument was that the dullest part of that deal was the whole point. Equiniti keeps the record of who owns what for roughly 3,000 issuers and more than 20 million shareholders, and it moves about $500 billion in payments a year. On Tuesday the SEC proposed rewriting the rules that govern firms like it.
Those rules went in at the end of the 1970s and the start of the 1980s, and the Commission has not substantively updated them since. I took my first job in markets in 1977 as an options Account Executive and was on the floor the year after, so I know what the job looked like when they were drafted. A vault, certificates, a clerk with a ledger book, and the mail. Commissioner Hester Peirce put the gap plainly: "Now few paper certificates exist, and transfer agents and other market participants are looking to a future in which many shares will be tokenized."
Of the 253 transfer agents that filed a Form TA-2 for the 2025 reporting year, 152 keep records and 126 act as paying agents, and together they pushed roughly $5 trillion in dividends and interest out the door over the year.
The Rewrite, Rule by Rule
The SEC's fact sheet lists eleven rules amended, one rescinded, and two written from scratch. Most of the amendments are housekeeping that came due a generation ago. Turnaround and posting deadlines get pinned to the settlement cycle we actually run on rather than the one from 1980. Registration takes effect 45 days after a Form TA-1 instead of 30. Recordkeeping gets one retention period in place of the current patchwork.
Two moves go further than tidying. Rule 17ad-12, today a safeguarding rule about not losing the securities in your custody, gets reframed as a risk management rule: written policies, a separate bank account for issuer and holder funds, a business continuity plan. And Rule 17ad-4, which exempts certain securities and smaller agents from the turnaround, processing and recordkeeping requirements, would be rescinded outright, on the reasoning that cheaper technology has made the carve-out unnecessary. If your firm has been living inside that exemption, the comment period is your window.
The Legend Rule
The piece I would read twice is proposed Rule 17ad-31. It sets requirements for placing and removing restrictive legends, and it would stop a transfer agent from facilitating an unregistered transaction unless the agent has a reasonable basis to believe it does not violate Section 5(a) of the Securities Act of 1933.
Read that in token terms. If the share register lives on a chain, the transfer agent is the party who has to decide whether a transfer is permitted, and on a chain that decision has to be made before the transfer, because afterward there is nothing to unwind. So the check moves into the contract. Whitelists, lockups, holder caps, the removal of a legend when a holding period runs out: all of it becomes code that a registered firm answers for under a federal rule. That is an engineering requirement arriving with a rule number attached, and it is the most concrete thing the Commission has yet said about how a tokenized cap table has to behave.
Notice what the proposal declines to do. It does not carve out a separate category for on-chain transfer agents. Blockchain gets written into the existing rulebook, which means a register kept on a chain is a transfer agent carrying the same duties as Computershare. Injective Institutional Services registered on August 19 as the first layer 1 blockchain to hold the status, and Superstate registered its own agent back in March 2025. Whatever this proposal becomes, those firms are inside the perimeter rather than beside it.
What I'm Watching
Who files a comment letter. The window runs 60 days from publication in the Federal Register. Equiniti, Computershare, DTCC and the two on-chain agents each have a different problem with this text, and the letters will tell you which parts are genuinely contested.
Whether 17ad-4 survives in some form. Small agents lose their exemption as drafted. How much relief the final rule leaves them decides how many of those 253 are still filing a TA-2 in 2029.
The roundtable on September 17. The Commission spends that day on 24-hour trading. Pinning transfer agent turnaround to "the current settlement cycle" is a clean idea right until there is no settlement day to pin it to.
Whether Bullish closes on Equiniti in January. Buying a transfer agent in the middle of a transfer agent rewrite changes the asset you thought you were buying.
Bottom Line
The pitch for years has been that the chain can be the record of ownership. The SEC has now answered, and the answer is yes. The register can move to a chain. The obligation does not move anywhere. Whoever keeps it still registers with the Commission, still gets examined, and still owns the consequence of a transfer that should not have gone through. That is a smaller claim than the industry has been making and a far more useful one, because it is the version an institution can underwrite. Rules drafted for a room full of certificates are being pointed at a smart contract, and the firms reading the proposed release this month are the ones who will write the code the final rule ends up describing.
Next week I am starting a short series on something closer to home. This proposal covers where ownership gets written down. The other half of any market is where risk gets priced, and institutional crypto options still do not have a structure worth the name. ISO Markets is being built for that gap, and the next couple of issues will be about what an institution actually needs before it will trade a crypto option in size.
Disclosure, not a recommendation: I am Chief Strategy Officer at ISO Markets and the founder of Liquid Mercury, which builds the technology behind it. Nothing in this issue is investment advice.
All the best,
— Tony
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