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Please find written input submissions to the Crypto Task Force below. The written input is posted without modification. We hope sharing the submissions will help encourage productive dialogue and continued engagement. Please note that the “Key Points” and “Topics” are AI generated. AI can make mistakes, and the Key Points and Topics are not a replacement for you reading the submissions. The Crypto Task Force has not reviewed these AI-generated summaries for accuracy or completeness. If you believe a Key Point or Topic is inaccurate, please email the Crypto Task Force at crypto@sec.gov. The written input provided to the SEC and posted on this page does not necessarily reflect the views of the Crypto Task Force or others in the U.S. Securities and Exchange Commission.
Innovation and investor protection in financial markets are complementary goals that can be achieved together through well-designed regulatory frameworks.
Tokenisation can improve post-trade processes such as reconciliation, collateral mobility, and automation, but its success depends on being implemented within established regulatory frameworks.
The history of modern equity markets shows that sustainable innovation flourishes when it strengthens trust and operates within clear and credible rules, rather than weakening governance in pursuit of speed or novelty.
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
The letter argues that the SEC’s attachment/separation framework for investment contracts applied to non‑security crypto assets is novel, lacks jurisprudential grounding, and cannot feasibly be implemented by third‑party interface providers because issuer‑side facts determining attachment are unknowable by those providers.
It requests a Commission‑level safe harbor exempting self‑custodial, user‑directed interfaces (e.g., MetaMask) from broker‑dealer registration when facilitating secondary transactions in non‑security crypto assets, even if an investment contract may have “attached” under the Release but not yet “separated.”
It contends that without such a safe harbor, U.S. interface providers face unworkable compliance obligations that will constrain token interoperability, distort competition relative to offshore providers, and reduce user protection by pushing activity to unregulated venues.
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
The report establishes that routing payment‑stablecoin balances into 1940 Act–registered money market funds is legally outside §404’s prohibition, because NAV‑based MMF shares are securities, not deposit‑equivalents, and §404 governs only yield on payment stablecoins.
It proposes a threshold NAV pass‑through test—requiring user‑borne downside risk, NAV‑tracking pricing, and 1099‑DIV tax treatment—under which any failure creates an irrebuttable presumption of prohibited passive yield.
It provides a six‑factor, on‑chain‑auditable framework for agencies to distinguish bona fide user‑initiated activity from disguised yield, anchoring “routing” within expected rulemaking categories (transfers and market‑making) rather than creating new statutory exceptions.
The petition requests that the SEC establish a recognized regulatory category for “Persistent‑Enforcement Digital Asset Systems,” where conditions governing asset use are automatically and continuously enforced at the asset level, independent of intermediaries.
The proposed framework would allow the SEC to distinguish digital assets that do not rely on ongoing managerial efforts (due to embedded, self‑executing enforcement) from those that do—directly affecting the Howey securities analysis.
The petition asserts that this structure would close material investor‑protection gaps, ensuring that conditions disclosed at issuance remain enforceable throughout the asset’s lifecycle, including across platforms and autonomous/AI‑driven transactions.
Crypto Lending, Custody, Public Offerings, Tokenization, Trading
The SEC should modernize Regulation ATS to explicitly accommodate DeFi based trading and lending protocols, providing durable legal certainty and a compliant pathway for onchain securities activities.
The Commission should issue guidance and exemptive relief under Exchange Act § 17A to allow distributed ledger based clearance and settlement—potentially granting blockchain protocols “clearing corporation” status to remedy UCC Article 8 property rights gaps.
The SEC should clarify offering, custody, and net capital treatment for tokenized securities (including onchain IPOs, broker dealer custody, and Rule 15c3 1 haircuts) to ensure these instruments receive consistent regulatory treatment with their traditional equivalents.
TEFRA’s bearer‑bond rules functionally prohibit tokenized bond issuance on public blockchains by denying issuers interest deductions and imposing excise taxes, creating a statutory barrier that Congress must amend to recognize compliant distributed‑ledger‑based bond registers.
Integration of tokenized securities into federal securities laws requires statutory or regulatory modernization—particularly expanding “broker” definitions, creating tailored DeFi‑broker/ATS frameworks, updating custody and transfer‑agent rules, and enabling onchain IPOs without fragmenting NMS market structure.
A BSA‑aligned compliance regime for tokenized securities—modeled on the GENIUS Act's token‑level monitoring and freeze‑and‑seize capabilities—is necessary to support pseudonymous, non‑custodial secondary trading while preserving investor protection and regulatory oversight.
The Coalition supports the SEC Staff’s clarification that non‑custodial user interfaces that merely convert user‑initiated instructions into blockchain‑legible commands do not constitute broker‑dealer activity, as they neither intermediate transactions nor take possession of customer assets.
The Coalition urges the SEC to undertake formal notice‑and‑comment rulemaking to establish a durable, principles‑based definition of “broker” aligned with evolving blockchain technologies, thereby preventing future expansive interpretations that could chill innovation.
The Coalition recommends extending regulatory clarity beyond user interfaces to other neutral infrastructure providers (e.g., validators, RPC/API providers, oracles, cloud services) to ensure they are not inappropriately categorized as broker‑dealers despite not performing brokerage functions.
The SEC cannot extend broker‑dealer, exchange, or adviser jurisdiction to software developers merely because their published code facilitates transactions; publishing software is protected speech unless the developer assumes agency, custody, or client‑specific discretionary control.
Government attempts to require software to incorporate identity collection, monitoring, or intermediation functions constitute compelled speech and unconstitutional prior restraint, because they force creators to alter expressive software design to satisfy government‑preferred architectures.
Regulatory authority may constitutionally reach developers only when they move beyond publication and into professional conduct—such as holding unilateral power over user assets, executing transactions, or exercising ongoing discretionary judgment over users’ financial affairs.
Facility status for a crypto ATS should apply only when the ATS functionally substitutes for, or extends, an exchange’s core market operations, not when the ATS merely shares enterprise infrastructure or ownership.
NMS plans and Form ATS requirements should be modernized—rather than replaced—to address 24/7 trading, crypto-specific reference data, and on‑chain settlement, maintaining regulatory equivalence between traditional and crypto markets.
Crypto ATS oversight should continue using the confidential, non‑approval Form ATS framework, complemented by targeted public disclosures and potential on‑chain alternatives to Form ATS‑R where transparency is inherently superior.
The Digital Chamber (TDC) urges the SEC to modernize Regulation ATS Rule 302, noting that certain record keeping requirements (including time sequenced order records and USD denominated trading summaries) may be impracticable or distortive for on chain matching engines and trading pairs that do not involve U.S. dollar valuation.
TDC recommends that the SEC evaluate whether on chain settlement flows risk exposing confidential subscriber trading information, and consider permitting or encouraging measures that allow ATS subscribers to mask wallet level activity to protect trading strategies.
TDC advises the SEC to reassess the application of Rule 15c3 5 to crypto ATSs, clarifying that traditional pre trade risk controls may be unnecessary or duplicative where atomic settlement inherently prevents certain risks (e.g., duplicative trades) while still requiring controls to address order entry errors and appropriately calibrated credit limits.
