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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.
Public Offerings, Safe Harbor, Security Status, Trading
The SEC’s attachment/separation framework for crypto assets creates significant legal uncertainty for non-issuer liquidity providers, as it lacks clear, objective standards for determining when a non-security crypto asset “separates” from an investment contract, making real-time compliance impracticable.
GSR requests the SEC to establish a broker-dealer registration safe harbor for OTC and market-making firms transacting in non-security crypto assets, regardless of whether an investment contract may have previously attached or not yet separated, to mitigate compliance risks and preserve market liquidity.
The proposed safe harbor would not affect obligations related to crypto asset securities, anti-fraud authority, or other federal regimes, but would provide interim relief for principal trading in non-security crypto assets pending further legislative action.
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
The issuer-sponsored model for tokenized securities, which preserves issuer control and authoritative ownership records, should be the foundation of the regulatory framework; modernization of DRS and FAST is a necessary precondition for fair competition among transfer agents.
The regulatory framework must recognize and address third-party tokenized products (including custodial and synthetic tokens) already in use, bringing them under clear investor-protective rules rather than driving them offshore.
Consistent application of the SEC’s January 2026 taxonomy is required, including to DTC’s tokenized entitlements, and relief should not be granted based on incumbency but on investor protection; distributed ledger technology should be considered as the long-term standard for securities ownership records.
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
The CLARITY Act addresses asset classification but fails to resolve secondary trading barriers for crypto assets, leaving legal assets impractical to sell due to outdated information requirements and inconsistent state exemptions.
GUARDD proposes SEC recognition of Qualified Disclosure Publishers (QDPs) to enable compliant, standardized, and accessible issuer disclosures, facilitating lawful secondary trading and preempting state manual-exemption patchworks while preserving anti-fraud authority.
The submission urges the SEC to include secondary trading in its crypto assets rulemaking, establish QDP criteria, and standardize token-specific disclosures to ensure tradability and investor protection.
Hinza Asif, Asia Web3 Alliance Japan (AWAJ) - Association
Japan’s House of Representatives has reclassified crypto assets as financial instruments under the Financial Instruments and Exchange Act, aligning Japanese law with a securities-law model and facilitating regulatory convergence with the U.S.
The proposal recommends establishing a bilateral “Sandbox Bridge Board” to enable startups admitted to a regulatory sandbox, exemptive, or no-action pathway in one jurisdiction to receive streamlined intake and coordinated supervision when testing the same product in the other, with mutual-recognition principles to reduce duplicative compliance.
The proposal requests a formal Japan–U.S. Crypto Regulatory Roundtable in Washington, D.C., to address classification and treatment of tokenized securities and real-world assets, cross-border trading and custody, stablecoin and payments regulation, and investor-protection standards for cross-border offerings.
AMMs fundamentally differ from traditional intermediated markets; their operation is governed by transparent, rule-based smart contracts, not by entities exercising discretion or handling orders, so applying intermediary-based regulatory frameworks is legally inappropriate.
Legal responsibilities under federal securities laws should attach only where participants exercise functions analogous to intermediaries (e.g., handling orders, executing trades for others); passive liquidity providers and protocol developers do not meet this threshold and should not be subject to intermediary classification.
The Commission is urged to issue guidance and consider targeted rulemaking clarifying how existing rules apply to discrete AMM functions (such as custody or user interfaces), and to provide no-action relief or safe harbor for innovators pending comprehensive regulatory clarity.
The SEC should require an implementation-verification layer for digital asset frameworks, ensuring that custody, reserves, tokenized-asset backing, customer-asset segregation, security status, trading integrity, adviser accountability, cybersecurity, sanctions exposure, and market reliance are all independently verified before market-wide reliance is permitted.
Regulatory clarity alone is insufficient; operational assumptions underlying digital asset market structures must be proven and verified to protect investors, issuers, exchanges, custodians, broker-dealers, advisers, DeFi platforms, wallets, payment systems, and federal agencies.
A fixed-scope Digital Asset Market Implementation Verification Screen should be established to identify unverified assumptions, missing evidence, responsible parties for verification, and residual risks in custody, reserves, tokenization, trading, cyber, consumer, adviser, cross-border, sanctions, and market integrity before regulatory frameworks become binding.
Peter Duggan, President, Securities Transfer Association
The SEC should distinguish Issuer-Sponsored Tokens from Third-Party Tokens, ensuring only issuer-authorized, natively issued tokenized securities receive regulatory relief or exemptions.
Issuer authorization, clear disclosures, and robust transfer controls must be threshold requirements for any tokenized-securities framework, with Third-Party Tokens subject to prominent differentiation and compliance procedures.
The Commission should modernize the Direct Registration System (DRS) to facilitate efficient conversion between traditional and tokenized securities, preventing infrastructure bottlenecks that disadvantage Issuer-Sponsored Tokens.
Custody, Public Offerings, Security Status, Tokenization, Trading
Tokenized securities offered to retail investors must be backed 1:1 by the actual underlying security, held by a regulated custodian, and subject to regular independent audits.
Clear, plain-language disclosure is required to explain exactly what the investor owns and what rights are attached; token holders must receive the same economic rights as ordinary shareholders, including dividends and distributions.
Custody, redemption, bankruptcy, and investor-recovery rules must be established before retail trading is allowed, and platforms must be subject to strong market-surveillance, anti-manipulation, cybersecurity, and conflict-of-interest rules.
The response advocates for a technology-neutral regulatory framework, emphasizing that rules should focus on regulatory outcomes (such as investor protection and market integrity) rather than prescribing specific technological means, and that principles-based standards are preferable to prescriptive requirements.
tZERO recommends rescinding the SEC’s “Three-Step Process” for ATS settlement of digital asset security trades, arguing that recent regulatory guidance now permits broker-dealers to custody crypto asset securities directly, making the previous workaround obsolete and unnecessarily restrictive.
The document proposes targeted amendments to existing forms (Form ATS and Form ATS-N) to clarify disclosure requirements for crypto asset security ATSs, rather than creating new forms, and suggests that public blockchain records should satisfy regulatory reporting and recordkeeping obligations, reducing duplicative compliance burdens.
