SEC Approves Blockchain Startup as Transfer Agent For Stock Ownership

SEC Securities and Exchange Commission blockchain startup registered transfer agent Securitize

The U.S. Securities and Exchange Commission has approved a blockchain startup as a registered transfer agent for recording stock ownership, in a move that is expected to increase the volume of securities issued on the blockchain.

Startup Securitize was granted approval by the regulator, which means the firm is now authorized to act as an “official keeper of records” in respect to stock ownership and transfers.

While blockchains themselves deliver this function of keeping accurate, immutable records of ownership, the San Francisco-based firm says the approval is nevertheless a landmark for the firm, and for the adoption of blockchain technology more broadly.

Carlos Domingo, co-founder and CEO of Securitize, said the move would help reassure investors that securities on the blockchain are issued in a regulated environment, while highlighting a likely growing need for transfer agents in the future.

“We can increase the amount of securities issued on the blockchain and give comfort to people that this is a regulated space. The SEC has also started approving other types of exempted securities like Reg A+ and down the road those people will need transfer agents.”

Following the authorization, Securitize is offering registration for free, in place of the current process that costs $150 per registration for SEC-approved securities.

The protocol powering the Securitize platform was open-sourced back in May. According to the firm, Securitize is the first SEC-registered firm of its kind to have a functional blockchain protocol in place.

The protocol includes integrations that tie in with several alternative trading systems (ATSs), including tZero, Sharespost and OpenFinance Network.

The approval is the latest example of the Securities and Exchange Commission warming to proposals from the sector, as blockchain technology continues to play an increasing role in mainstream finance and securities exchanges.

While the approval is a boost for Securitize and the blockchain sector, the regulator has been more reluctant to approval crypto investment products, despite a slew of proposals for bitcoin ETFs and other crypto funds.

Regarded as a “holy grail” product for attracting institutional investors to the crypto space, the SEC delayed a ruling on the latest batch of applications in recent weeks, with no suggestion approval is likely.

While the SEC has said it remains concerned about the liquidity, stability and transparency of global crypto markets, its decision to approve Securitize shows a growing acceptance of the underlying technology and its revolutionary potential for financial markets and global investment.