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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 letter argues that Citadel’s attempt to classify all entities and technologies involved in DeFi transactions as SEC-registered intermediaries is legally flawed, as autonomous software and developers without custody or control over user assets do not meet the statutory definitions of “broker” or “dealer.”
The signatories assert that expanding the definitions of “exchange” and “broker-dealer” to include DeFi protocols exceeds the SEC’s statutory authority and risks misclassifying non-intermediary software infrastructure, undermining innovation and regulatory clarity.
The letter supports notice-and-comment rulemaking for tokenized equities but urges the SEC to adopt frameworks—such as safe harbors—that distinguish between centralized and decentralized systems, ensuring that only entities posing traditional risks are subject to registration.
Ondo urges the SEC to support both direct and intermediated pathways for tokenized securities, including models involving securities entitlements held through DTC, and to provide targeted regulatory relief for such models1.
The letter advocates for the SEC to formally recognize and permit the use of public, permissionless blockchains in tokenized securities markets, asserting that such systems align with investor protection goals and ownership rights1.
Ondo supports the SEC’s proposed “innovation exemption” and recommends prioritizing regulatory action to enable tokenized securities products for retail investors, particularly those backed by securities held in DTC1.
The SEC should not grant broad exemptive relief from the statutory definitions of “exchange” and “broker-dealer” for DeFi trading protocols, as doing so would undermine investor protections and create a dual regulatory regime for the same securities.
Many DeFi trading protocols and associated participants (e.g., developers, wallet providers, AMMs) meet the legal definitions of “exchange” or “broker-dealer” and should be regulated accordingly under existing securities laws.
The SEC should pursue a notice-and-comment rulemaking process to evaluate tokenization initiatives, ensuring that any regulatory changes preserve core investor protections and apply equally to tokenized and traditional equities.
The framework proposes a legally enforceable structure for using tokenized U.S. Treasury bills and GENIUS Act-compliant stablecoins as derivatives margin, with strict eligibility, custody, and redemption standards to ensure investor protection and bankruptcy remoteness.
It recommends a phased regulatory sandbox pilot limited to institutional participants, with conservative concentration caps, enhanced haircuts, and mandatory reporting to validate operational resilience before broader market adoption.
The submission calls for joint rulemaking by the CFTC and SEC to harmonize standards on tokenized collateral eligibility, valuation, and custody, reducing regulatory fragmentation and enhancing legal certainty across overlapping jurisdictions.
Securities Industry and Financial Markets Association (SIFMA)
Broad exemptions from federal securities laws for tokenized securities risk undermining investor protection, fragmenting markets, and creating regulatory arbitrage by allowing functionally identical activities to operate outside established oversight frameworks.
Entities performing intermediary-like functions in tokenized securities markets—whether centralized or decentralized—should be subject to the same regulatory obligations as traditional brokers, dealers, exchanges, and clearing agencies.
Any innovation exemption framework must be narrowly tailored, include investor and transaction limits, and be subject to public notice-and-comment rulemaking to ensure it supplements rather than substitutes for comprehensive regulation.
Wintermute urges the SEC to clarify that broker-dealers using on-chain settlement for tokenized securities—without holding customer assets—qualify for the Customer Protection Rule’s (Rule 15c3-3) paragraph (k)(2)(i) exemption.
The firm recommends that proprietary traders and liquidity providers on DeFi protocols should not be classified as “dealers” under the Exchange Act if they do not engage in customer-facing activities or market intermediation.
Wintermute proposes that broker-dealers be allowed to apply a 20% net capital haircut to non-security crypto assets with a “ready market,” determined by objective criteria such as trading volume and liquidity across centralized and decentralized platforms.
Computershare advocates that listed issuers should retain discretion to issue tokenized securities directly, ensuring legal ownership is recorded on the Master Securityholder File (MSF), thereby preserving investor rights and issuer control.
The SEC should mandate that third-party tokenized securities be assigned distinct ISINs and stock codes, with clear disclosures to prevent investor confusion and to distinguish them from issuer-sponsored tokenized securities (ISTs).
Computershare recommends that updates to transfer agent rules remain technology- and format-neutral, avoiding references to specific technologies like blockchain, while still enabling secure and efficient tokenized securities processing under existing regulatory frameworks.
The submission documents pervasive inconsistencies in labeling, pricing, and volume reporting across major cryptocurrency data providers, which materially impact risk measurement and portfolio construction.
The paper proposes a scalable aggregation methodology to isolate unreliable data sources and introduces a data quality index and provider grading system for improved market oversight.
The findings support the need for unified crypto identifiers and recommend extending Vendor Display Rule–style standards to crypto data vendors to enhance transparency and investor protection.
The SEC should adopt a technology-neutral approach to regulating crypto assets, extending existing staff positions, no-action relief, and interpretative guidance applicable to non-tokenized funds to tokenized funds as well.
The SEC should clarify and update regulations regarding the custody of crypto assets, including eligibility of custodians and self-custody arrangements under Section 17(f) of the Investment Company Act of 1940.
Any new regulations should be principles-based, not prescriptive, and should avoid imposing unnecessary compliance burdens, especially on smaller entities and market entrants.
Diamante proposes a quantum-resilient blockchain infrastructure that supports post-quantum cryptographic integrity and verifiable tokenization of environmental assets, aligning with SEC sustainability and digital asset frameworks.
The system enables transparent, auditable ESG disclosures through immutable transaction history, facilitating compliance with SEC reporting and disclosure requirements for digital assets.
Diamante’s framework demonstrates how tokenized sustainability markets can operate within evolving U.S. securities laws, supporting innovation while maintaining regulatory guardrails and market integrity.
