SEC Proposes Modernization of Transfer Agent Rules and Releases Agenda for 24-Hour Trading Roundtable, OCC Sends Final Stablecoin Rule to OMB and 9th Circuit Rules on Prediction Markets Case

The SEC proposed the first substantive overhaul of its transfer agent rules since they were adopted. The updates include modernizing the rules to reflect how transfer agents carry out their activities in light of technological advancements, such as the use of electronic and blockchain-based recordkeeping and uncertificated securities. The SEC also released the agenda and panelists for its Sept. 17 roundtable on preparations for 24-hour trading.

On the derivatives side, the 9th Circuit affirmed in part a District Court order dissolving a prediction market’s preliminary injunction against Nevada gaming regulators. The court held the platform failed to show a likelihood that the Commodity Exchange Act preempts state gaming regulations as applied to its sports-related event contracts. Also, the New Jersey Attorney General filed a petition with the U.S. Supreme Court for certiorari asking whether the Dodd-Frank Act preempts states from regulating sports bets offered on CFTC-registered markets.

The OCC transmitted its final rule for OCC-supervised payment stablecoin issuers to the Office of Management and Budget for review. Treasury released the G20 Chair’s Statement in which G20 finance ministers and central bank governors committed to regulatory frameworks establishing clear pathways for digital asset innovation.

Regulatory Updates

SEC Proposes to Modernize Transfer Agent Rules, Addressing Blockchain-Based Recordkeeping

• On Sept. 1, the SEC proposed updates to the rules and forms applicable to registered transfer agents, releasing alongside a proposing release and fact sheet. The updates include modernizing the rules to reflect how transfer agents carry out their activities in light of technological advancements, such as the use of electronic and blockchain-based recordkeeping and uncertificated securities. The public comment period will remain open for 60 days after publication in the Federal Register.
• Transfer agents perform critical functions related to the securities life cycle that help protect investors and support the prompt and accurate processing of securities transactions. For example, transfer agents facilitate the issuance, cancellation and transfer of paper and electronic securities and maintain the official record of ownership of an issuer’s securities. The SEC first adopted the majority of the federal transfer agent rules in the late 1970s and early 1980s. At that time, the majority of investors held their securities in certificated (i.e., paper) form, and the rules have not been substantively updated since that time.

SEC Releases Agenda and Panelists for Sept. 17 Roundtable on Preparations for 24-Hour Trading

• On Sept. 1, the SEC announced the agenda and panelists for its Sept. 17 roundtable on preparations for 24-hour trading, which it first announced on July 23. The roundtable will run from 10:00 a.m. to 4:00 p.m. ET at SEC’s headquarters and will be open to the public and webcast.
• The three panels will address preparedness for a 24-hour market, including exchange and broker-dealer readiness, overnight surveillance, closing price processes, clearance and settlement changes and investor protection practices, systems readiness, and expected impacts on liquidity and capital formation. Panelists are drawn from national securities exchanges, broker-dealers, market makers, asset managers and more.

Comment Period Closes on SEC Request for Comment on Novel ETFs

• The comment period closed on Aug. 31 for the SEC’s request for comment on exchange-traded funds seeking to invest in innovative asset classes or engage in novel investment strategies, which the SEC issued on June 30 and published in the Federal Register on July 2. The request defines the category to include funds holding crypto assets, commodities, event contracts, private assets, single-stock and leveraged strategies, and blockchain-enabled products, and asks whether funds whose principal strategy is to invest in non-security assets qualify as investment companies under the Investment Company Act of 1940.

CFTC and SEC Further Extend Form PF Compliance Date

• On Aug. 31, the CFTC announced a joint final rule with the SEC further extending the compliance date for the Form PF amendments adopted on Feb. 8, 2024, from Oct. 1, 2026, to July 1, 2027. The rule was published in the Federal Register on Sept. 3 and is effective that date. This is the fourth extension of the compliance date, and the commissions granted it so that filers are not required to build to requirements that the commissions proposed on April 20 to amend or eliminate. Form PF is the confidential reporting form for certain SEC-registered investment advisers to private funds, including advisers to digital asset funds that are also registered with the CFTC as a commodity pool operator or commodity trading adviser.

OCC Submits Final GENIUS Act Stablecoin Rule to OMB

• The OCC transmitted its final rule establishing standards for payment stablecoin issuers subject to its jurisdiction to the Office of Management and Budget on Aug. 27. The text of the final rule is not public. The final rule follows the notice of proposed rulemaking the OCC issued on Feb. 25 and published in the Federal Register on March 2. Additional details on that proposal can be found here.

Additional Updates

G20 Chair’s Statement Addresses Digital Assets, Stablecoins and Cross-Border Payments

• On Sept. 1, Treasury released the G20 Chair’s Statement from the second meeting of G20 finance ministers and central bank governors under the U.S. presidency, held in Asheville, North Carolina, on Aug. 31 and Sept. 1. The statement recognizes the role that digital financial innovation, including digital assets, can play in supporting broad-based economic growth and the role of the private sector in driving that innovation, alongside the importance of safeguarding financial stability and maintaining trust in the monetary and payment system.

Prediction Markets Updates

• On Aug. 28, the U.S. Court of Appeals for the 9th Circuit affirmed in substantial part a District Court order dissolving a prediction market’s preliminary injunction against Nevada gaming regulators. The court held that platform failed to show a likelihood that the Commodity Exchange Act (CEA) preempts state gaming regulations as applied to its sports-related event contracts. The court remanded only the separate issue of election contracts for further analysis by the District Court. Other courts addressing similar questions have reached different results and litigation on this issue continues.
• On Sept. 2, the New Jersey Attorney General filed a petition with the U.S. Supreme Court for certiorari from the 3rd Circuit’s April decision, asking whether the Dodd-Frank Act preempts states from regulating sports bets offered on CFTC-registered markets.
• A Michigan state court entered a preliminary injunction on Sept. 1, announced by the state attorney general on Sept. 2, requiring the prediction markets platform to continue blocking state residents from accessing sports-related event contracts.