U.S. Regulator Approves Tech Startup to Record Stock Transfers on the Blockchain
The Securities and Exchange Administration (SEC), the U.S.-based securities regulator, has approved the registration of a technology provider as a transfer agent for issuing blockchain-based securities including equity and debt instruments. Securitize, a blockchain startup that provides the technology for issuing blockchain tokens, is hopeful this move will boost mass adoption.
Wednesday’s announcement means that Securitize can act as the official record keeper of security token ownership. “We can increase the amount of securities issued on the blockchain and give comfort to people that this is a regulated space,” said Securitize Co-Founder and CEO, Carlos Domingo. He added that “The SEC has also started approving other types of exempted securities like Reg A+ and down the road those people will need transfer agents.”
To expedite the adoption of this service, Securitize, is offering clients the opportunity to record ownership transfers at zero cost, which typically have a price tag of $150 per transfer of traditional paper-based securities such as physical stock certificates. Securitize will earn revenues from other services such as issuing dividends, interest payments, and managing share buybacks and shareholder voting.
The tech startup claims to be the first blockchain-based transfer agent to register with the SEC and allow digital securities to be traded on regulated Alternative Trading Systems (ATS), including reputable platforms like OpenFinance Network and tZERO. Out of the 11 outstanding digital securities issued under its protocol, five are currently traded on a regulated ATS registered with the SEC.