An official website of the United States government
Here’s how you know
Official websites use .gov
A .gov website belongs to an official government organization in the United States.
Secure .gov websites use HTTPS
A lock
()
or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.
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.
The framework establishes a rigorous operational logic for distinguishing payment-only stable-value instruments from yield-bearing or reward programs, triggering additional disclosure and operational requirements when features cross category boundaries. This enables clear regulatory classification and enforcement under existing securities laws.
Operators must maintain strict legal, operational, and disclosure separation between payment instruments and any yield or reward programs. Commingling reserves or income across categories is prohibited, and material changes (e.g., adding yield features or modifying redemption terms) require governance approval and regulatory notification.
The submission mandates documented stress response playbooks (e.g., liquidity gates, redemption throttles, queues) with objective triggers, immutable logging, and standardized evidence packs. These controls ensure orderly market conduct, participant protection, and facilitate rapid, transparent regulatory examination during run-like dynamics or incidents.
Implements cryptographic content-addressing (SHA-256) and hash-chaining to provide tamper-evident proof of authenticity, supporting Federal Rules of Evidence 901 and 1002 for admissibility.
Establishes structured workflows for court-ordered or regulatory preservation, including dual authorization, enhanced replication (5 nodes across 3 jurisdictions), and air-gapped vault storage to ensure compliance with litigation and enforcement obligations.
Maintains immutable custody event logs for every evidence lifecycle action (creation, replication, access, transfer, disposal), enabling complete audit trails and supporting business records exception under FRE 803(6).
Custody, Public Offerings, Security Status, Tokenization, Trading
Congress must establish common-sense rules for crypto firms engaging in traditional financial activities (capital raising, custody, trading) to ensure investor protection and market integrity.
Registration requirements, anti-fraud provisions, and oversight mechanisms are essential to mitigate risks such as market volatility, financial crimes, and scams, preserving trust in digital asset markets.
Legislation should define when cryptocurrencies qualify as securities, commodities, or other asset classes to enable proper compliance and handling of unclaimed digital assets.
Determining whether non-custodial wallet providers qualify as brokers under the Exchange Act requires a functional, facts-and-circumstances assessment—not reliance on labels or interface appearance.
The court held that non-custodial wallets with embedded interfaces do not constitute brokers absent meaningful participation in effecting transactions, reinforcing that commission-based payment alone is not dispositive.
SEC and judicial precedents confirm that transaction-based compensation and routing services, standing alone, are insufficient to trigger broker status without discretionary control or core trading functions.
Public Offerings, Regulatory Sandbox, Security Status
The comment references an Op-Ed intended to inform the SEC’s review process, suggesting reliance on external expert analysis for regulatory considerations.
It emphasizes investor protection in the context of evolving financial markets, aligning with the SEC’s statutory mandate under securities laws.
The submission implicitly advocates for regulatory responsiveness to rapid changes in financial products and practices, which may impact compliance and enforcement frameworks.
Tokenization cannot rely solely on technical execution; legal legitimacy must be established before issuance. Without a clear, verifiable legal regime and enforceable rights embedded ex ante, automatic execution creates systemic risk.
SEC no-action letters do not constitute approval or doctrinal clarity; they are ad hoc containment tools. Their recurrence reflects the absence of a standardized framework for determining whether a token qualifies as a security or other legal object prior to issuance.
Smart contracts transform norms into automatic execution, eliminating ex post correction margins. This demands rigorous alignment between legal documentation and code, with enforceable restrictions coded and auditable to prevent reliance on narrative-only limitations.
Current wealth-based thresholds under Rule 501 of Regulation D are outdated; Fairmint advocates for knowledge-based and conditional accreditation frameworks to expand investor access.
Proposal for an SEC-administered, easily accessible online exam (“Accreditation Series”) to qualify individuals regardless of wealth or income, aligning with the Equal Opportunity for All Investors Act of 2025.
Suggests embedding accreditation and eligibility checks into programmable securities via smart contracts, enabling pre-trade enforcement and cryptographic auditability for regulatory compliance.
The SEC should use its exemptive authority and staff guidance to enable tokenized securities trading under clear, principles-based conditions while formal rulemaking is developed.
A technology-neutral regulatory approach is essential to avoid rules that become obsolete and to ensure fair competition without favoring specific technologies.
Interim measures like pilot programs and conditional relief are critical to gather data, address investor protection and oversight concerns, and inform comprehensive rulemaking.
OTCM’s ST22 Security Token model fully satisfies SEC Category 1 requirements, including direct issuer board authorization, SEC-registered transfer agent custody, CUSIP assignment, and 1:1 preferred share backing.
The submission advocates targeted regulatory relief and safe harbor provisions for issuer-authorized tokenization models serving abandoned OTC markets, emphasizing qualified custody and verifiable 1:1 backing.
OTCM integrates protective conversion triggers and programmable compliance controls (e.g., circuit breakers, wallet concentration limits) to mitigate counterparty and bankruptcy risks identified by the SEC.
The framework mandates a machine-readable Standardized Disclosure Schema (SDS) for tokenized real-asset securities, requiring issuers to provide verifiable, version-controlled disclosures, each field of which must be backed by specific evidence artifacts (Disclosure Evidence Pack, or DEP). This transforms vague disclosure obligations into auditable, regulator-ready data, reducing legal ambiguity and examination friction under U.S. securities laws.
The Exit & Liquidity Annex (ELA) establishes legally binding protocols for investor exit, secondary market transfer, liquidity stress modes, and offboarding to legacy systems. It requires explicit disclosure of liquidity modes (normal, limited, stress, offboarding), transfer restrictions, redemption rights (if any), and failure remediation, ensuring investors are never permanently locked in and that all exit mechanisms are transparent and enforceable.
The standard introduces a three-lane attestation model: (1) issuer self-certification, (2) service provider verification, and (3) independent assessor certification, with increasing levels of independence and legal assurance. Critical disclosures (e.g., valuation, financials) require independent third-party attestation for pilot eligibility, and all evidence must be digitally signed, checksummed, and retained per SEC recordkeeping requirements.
