SEC blockchain overhaul triggers $369M liquidation wave across XRP, Ether, Solana

The SEC's first rewrite of transfer agent rules since the early 1980s — a 421-page proposal on blockchain recordkeeping — landed as $369 million in XRP, Ether, and Solana positions were liquidated on Sept. 2.

Commissioner Hester Peirce said the proposal was "more than a decade in the making" and invited comment on its implications for tokenization. Commissioner Mark T. Uyeda said the Commission had instead pursued a "regulation-by-enforcement approach, which was a piecemeal strategy that provided neither clarity nor predictability."

The proposal would require transfer agents to report how many issues maintain their master securityholder file on a distributed ledger and to split tokenized issues into issuer-sponsored and third-party-sponsored categories. It also asks whether agents can tie wallet addresses and quantities held to offchain records of holder names and addresses, so an onchain transfer also moves the master file. The rule change follows a separate SEC proposal sent to the White House last week covering how investment advisers and funds custody digital assets.

The comment period runs 60 days after publication in the Federal Register, while the Senate is scheduled to hold a procedural vote on the Clarity Act on Sept. 15 — a bill that would divide crypto oversight between the SEC and CFTC. Industry executives at the Wyoming Blockchain Symposium in August expressed pessimism about the bill's chances before the midterms.

The liquidation cascade unfolded as leveraged longs unwound across all three assets, with XRP joining Ether and Solana in the forced selling. The timing of the SEC announcement — published alongside the agency's agenda for a Sept. 17 roundtable on 24-hour trading — added to the sense of a regulatory environment in flux.

SEC Chairman Paul S. Atkins said the rules would reflect agents' use of "electronic communications and blockchain technology." The proposal would also rescind an exemption rule, set a single retention period for most records, and reframe the safeguarding rule as a risk-management requirement covering cybersecurity and business continuity.

The Clarity Act's uncertain path adds another layer of complexity. The Senate adjourned for its August recess without voting on the bill, and Senate Majority Leader John Thune has scheduled a key procedural vote for Sept. 15. Unresolved issues include stablecoin rewards and ethics provisions tied to President Trump and his family's crypto interests. Arizona Sen. Ruben Gallego, one of only two Democrats voting to advance the bill out of the Senate Banking Committee, has been working on a bipartisan compromise regarding ethics language.

"If you're looking to deploy capital and invest, and one jurisdiction has an established framework while another jurisdiction like the U.S. may be subject to, every two to four years, rapid and extreme change — it's hard to allocate capital," said Andrew McCormick, head of institutional and market development at Chainlink Labs.

The SEC's rulemaking push, combined with the custody rule overhaul and the transfer agent proposal, shows the agency under Atkins is moving to fill the regulatory gap through administrative action rather than waiting for Congress. Law firm Cahill Gordon & Reindel told clients Tuesday that the SEC is "on a mission to simplify its rules."

For XRP, Ether, and Solana holders, the immediate question is whether the liquidation cascade marks a short-term deleveraging event or the beginning of a sustained repricing as market participants assess the compliance burden of the proposed rules. The 60-day comment window and the Sept. 15 Clarity Act vote will provide the next data points.

This article is for informational purposes only and does not constitute investment advice.