Sep. 16, 2026
Subject: Comment on File No. S7-2026-30 - Deterministic Identity and Transaction Binding for DLT-Based Securities Records
Dear Secretary Countryman,
I respectfully submit this comment concerning the use of distributed ledger technology ("DLT") for securities ownership records and transfers under File No. S7-2026-30.
As securities ownership moves increasingly onto DLT networks, an important technical issue is how an on-chain wallet address can be deterministically linked to the legally relevant off-chain shareholder record, while preserving the confidentiality of personally identifiable information ("PII").
I propose consideration of a fixed-field canonicalization and deterministic cryptographic binding mechanism as one possible technical approach.
Under this approach, verified identity information and a wallet address are normalized and serialized according to a predefined field order. A cryptographic hash, referred to here as an IdentHash, is then generated from the canonicalized data. The underlying PII remains in the transfer agent's protected off-chain system, while the resulting cryptographic reference may be recorded or referenced on-chain.
This approach provides:
Determinism: identical canonical inputs produce the same cryptographic identifier; Verifiability: the binding can be independently verified without placing the underlying PII on-chain; PII separation: sensitive personal information remains off-chain; and Multi-ledger interoperability: the same canonical reference can be used across different DLT networks. A related issue arises at the transaction level.
For example, a securities transfer may be represented as:
Security ID + Sender + Receiver + Amount + Nonce
When these transaction elements are normalized and placed in a predetermined field order, a deterministic transaction reference can be generated. This provides a common reference for identifying the same underlying transfer even when different blockchains generate different native transaction hashes.
This may be particularly relevant in a multi-chain environment. For example, the same transfer of 200 shares from A to B could have different native transaction IDs on Ethereum and another DLT. A common deterministic transaction reference could provide an additional basis for cross-ledger reconciliation, ownership-position reconciliation, and total securities-quantity management, while preserving each ledger's native transaction identifier.
This approach does not require the Commission to mandate IdentHash or any particular cryptographic algorithm. Rather, I respectfully suggest that the Commission consider whether deterministic fixed-field canonicalization and cryptographic binding can provide a technology-neutral means of addressing the relationship among:
legal holder identity → wallet address → security → transaction → ownership position → DLT record.
I respectfully request that the Commission consider:
whether such deterministic identity binding can be used to link wallet addresses with protected off-chain shareholder records; whether such references can form part of the reconciliation process between DLT records and a Master Securityholder File; and whether a common deterministic transaction reference can support reconciliation where securities records or transfers exist across multiple distributed ledgers. Thank you for considering this technical perspective in connection with File No. S7-2026-30.
Respectfully submitted,
Seongho Lee
Korea Ruby Gemological Institute (KRGI)
Republic of Korea