By Vanessa Malone

This summer the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) issued a Joint Statement addressing how securities laws and regulations should apply to digital securities, which they refer to as digital asset securities.

This statement worked to identify and clarify the overlap between existing methods in place for securities issuances and the new wave of issuing securities on the blockchain.

One key area of tension was the problem with digital securities custody and what counted as a trusted record for investors’ digital securities holdings, something regulators refer to as a ‘good control location.’

Yes, the blockchain has demonstrated its incredible ability to maintain an issuer’s cap table and manage shareholder holdings in real-time. We believe it offers a valuable upgrade from current custody solution inefficiencies involving slow settlement times and inaccurate shareholder listings.

But, it was evident that custody solutions that relied solely on custodian features being embedded into smart contracts on the blockchain were limited and constrained by the very thing that made it so powerful — a blockchain’s immutability.

The permanence on the blockchain made it difficult to make necessary changes to the digital securities. For example, if the solution were to only exist using smart contracts, the issuer could be forced to burn, reprogram, and reissue new tokens each time a regulatory change or any of the other intricacies that come with managing securities happens. Another concern was protecting investors if their private keys were compromised by a centralized entity, whether its a broker-dealer or other third-party with access to the keys for an investor’s assets.

To summarize, the blockchain has the ability to replace some current methods in place. But in some instances instead of reinventing the wheel, the blockchain could instead be utilized to strengthen and enhance roles that already work in today’s capital markets.

One of those roles is that of a transfer agent, and it seems as if the industry is finally embracing this fact and working to embed this existing role into the new world of digital securities.

When our company Horizon began building out our end-to-end tech stack for digital securities two years ago, we started with the goal of providing a frictionless route from issuance through to secondary trading. This led to the integration of a transfer agent solution into our methodology to best support issuers, truly, from start to finish.

As a first-mover, we launched CustodyWare in January to enable registered U.S. transfer agents to compliantly manage digital securities on behalf of their issuers. Our first client to license the solution was Vtoken, a division of Vstock Transfer.

It seems now we are beginning to see a new wave of adoption as a result of this joint statement and companies are beginning to develop and deploy solutions that align their companies with this guidance.

Just recently, Securitize became a registered transfer agent and Tokensoft announced it developed a tool for transfer agents to manage security token offerings.

We believe this industry shift towards enhancing certain aspects of traditional securities management with new technology will offer a smoother evolution into the future of securities. It’s exciting to see the industry moving positively towards solutions that can propel the industry forward

For more information about Horizon’s one-stop-shop for digital securities, please visit us at

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