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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.
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.
The proposed Digital Markets Restructure Act of 2026 establishes a uniform federal framework for the issuance, trading, custody, and supervision of digital assets, preempting inconsistent state laws and eliminating duplicative registration requirements for entities operating under joint SEC and CFTC oversight.
Regulatory jurisdiction over digital assets is determined by a risk-based classification model: enterprise risk falls under SEC, exposure risk under CFTC, and market risk is subject to joint oversight, with hybrid instruments supervised collaboratively and lead supervisor designation rotating as risk profiles change.
The Act introduces proportionate, technologically adaptive regulation, recognizing that digital assets may modularize economic rights and risks, and mandates that regulatory requirements scale according to residual risk rather than asset form or label, with safe harbor provisions for innovation and privacy-preserving compliance mechanisms.
The Kit does not create new regulatory requirements or legal mandates; it operationalizes existing market integrity expectations (such as those under Rule 15c3-5 and Rule 17a-4) for tokenized markets, providing standardized surveillance evidence and workflows that align with current statutory and regulatory frameworks.
Surveillance operates under a strict tiered access model (Tier 0/1/2), ensuring that participant identities remain pseudonymous unless objective manipulation indicators are met and dual legal/compliance approval is obtained, in line with Regulation S-P and due process standards.
The Kit mandates cryptographic hash chaining, digital signatures, and tamper-evident storage for all surveillance evidence, ensuring admissibility and integrity for enforcement actions, and aligning with SEC books and records retention requirements.
The SEC’s exemptive authority under Section 36 of the Exchange Act allows exemptions only if “necessary or appropriate in the public interest” and consistent with investor protection, requiring consideration of efficiency, competition, and capital formation.
Exempting DeFi trading venues and order-entry firms from registration could disapply core investor protections (e.g., best execution, trade reporting, financial responsibility), creating a parallel regulatory regime for the same securities.
Granting exemptions based solely on technological differences risks regulatory arbitrage, undermining market integrity and potentially impairing liquidity, transparency, and resiliency across U.S. equity markets.
The framework explicitly rejects global harmonization and ensures that domestic laws and supervisory authority remain primary, with bilateral MoUs defining coordination procedures without transferring decision-making authority.
Cross-border evidence portability operates under a strict “no raw PII export by default” principle, relying on attestations, pseudonymization, and purpose-limited extracts, with exceptions only under Tier 2 emergency protocols and documented legal authority.
Seven operational playbooks address legal tensions such as retention vs. deletion mandates, data localization restrictions, secrecy obligations, and privilege assertions, providing structured escalation paths and bilateral governance for resolution.
Congress is considering market structure legislation for digital assets that must include clear registration requirements, transparency standards, and anti-fraud/anti-manipulation rules to protect investors.
Louisiana legislation such as HB 488 affirms residents’ right to self-custody of digital assets, providing regulatory clarity and preventing exploitation through loopholes.
Exemptions in some federal proposals could allow developers to bypass core investor protections, increasing risks of fraud and financial crimes for consumers.
The SEC should clarify that proprietary trading for one’s own account in tokenized equity markets—without customer solicitation, custody, or agency execution—does not trigger dealer registration under Exchange Act §3(a)(5).
Innovation exemptions must ensure tokenized equity markets can function effectively by allowing liquidity providers to engage in on-chain trading, price discovery, and arbitrage without registration obligations designed for customer-facing intermediaries.
Existing broker-dealer regulations (e.g., Reg NMS, Reg SHO, custody, clearing) require tailored adaptation for smart contract-based settlement; exemptions should provide time for these frameworks to evolve while enabling immediate liquidity provision.
The kit establishes technical controls and standardized evidence artifacts to demonstrate continuous compliance with SEC Customer Protection Rule 15c3-3 and the Custody Rule, enabling verifiable segregation and control of digital assets without reliance on trust.
It provides examiner query packs and failure scenario playbooks, allowing independent regulatory verification of asset segregation, key management, and recovery procedures, including protocols for insolvency, key compromise, and asset return.
The kit translates existing custody requirements into auditable operational procedures but does not create new regulatory obligations, assert legal conclusions, or seek SEC endorsement of specific custody models or technology implementations.
The Pack provides legally substantive templates for technical standard changes, conformance updates, and pilot expansion requests, ensuring that filings address all required regulatory elements, evidence, and governance approvals before submission to the SEC.
It operationalizes a detailed crosswalk mapping pilot evidence artifacts to regulatory recordkeeping and surveillance objectives (e.g., SEC Rule 17a-4, CAT), demonstrating how tokenized securities pilots can meet or exceed existing audit trail, retention, and integrity requirements.
The Pack establishes a legally relevant, tiered model for regulatory access to participant data (aggregate, routine, emergency), with purpose limitation, dual-control approval for sensitive access, and mandatory post-event review, supporting privacy, due process, and proportionality in regulatory oversight.
Securities Industry and Financial Markets Association (SIFMA)
Wallet providers performing broker-dealer functions for tokenized securities must register under the Exchange Act; exemptions or no-action relief are inappropriate as they undermine investor protection and market integrity.
Clear regulatory distinctions are required between true non-custodial wallet services and models involving custody or safekeeping, as the latter may trigger broker-dealer or other regulatory obligations.
Regulatory clarity should be achieved through durable, notice-and-comment rulemaking that defines when wallet providers are or are not brokers, rather than through ad hoc exemptions or safe harbors.
