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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 proposal distinguishes between Participation Tokens (classified as high-risk securities under Regulation D), IP-NFTs (treated as securities representing intellectual property rights), and Utility Tokens (potentially non-securities if used solely for governance and protocol functions).
The Knowledge Provenance Protocol (KPP) seeks inclusion in the SEC’s innovation exemption sandbox, proposing tailored disclosure requirements, DAO registration pathways, and investor protection mechanisms for scientific funding models.
The protocol incorporates GENIUS Act-compliant stablecoins for royalty payments, aligning with the federal regulatory framework for payment stablecoins and ensuring compatibility with U.S. digital asset compliance standards.
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.
Receipt-based cryptography is proposed as a solution to evidentiary gaps in current compliance regimes, enabling verifiable proof of non-events (e.g., no unauthorized access or wash trades).
The memo advocates for regulatory recognition of cryptographic proof-of-absence receipts as valid artifacts in SEC examinations and enforcement actions.
It recommends the SEC invite pilot submissions from market participants to demonstrate these cryptographic receipts in real-world compliance workflows (e.g., custody, trade surveillance).
Charles Thomas - Proving What Didn’t Happen - SSRN Comprehensive Paper
Evidentiary compliance introduces cryptographic receipts (e.g., EIV, CSTP, RMT/AVCR) that provide verifiable proof of non-events, addressing legal demands to demonstrate that prohibited actions or access did not occur.
The framework shifts compliance from procedural attestations to cryptographic evidence, enabling organizations to withstand adversarial scrutiny and regulatory audits by proving both actions and their absence.
Lifecycle and relational receipts allow reconciliation of conflicting legal mandates (e.g., GDPR deletion vs. SEC retention) by proving data was both deleted for one purpose and inaccessible for another, satisfying dual regulatory obligations.
Dmytro Lyushenko and Oleksandr Tuholukov, NOTA LLC and NOTA Digital Currencies Research Center Inc.
The SEC should require qualified custodians of digital assets to adopt formal, written succession policies addressing death or incapacity of asset holders, including evidentiary standards, asset transfer procedures, and safeguards against unauthorized claims.
The SEC should define and regulate “digital vault” architectures as a distinct custody category, emphasizing cryptographic security, role separation, auditability, and integration with legal instruments like wills and court orders.
Issuers of Real-World Asset (RWA) tokens should be required to provide granular, machine-readable disclosures on asset linkage mechanisms, redemption rights, and potential systemic impacts on underlying markets.
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.
Crypto Lending, Custody, Safe Harbor, Security Status
DeFi credit protocols that are non-custodial, over-collateralized, governed by open-source code, and not used for capital raising do not constitute investment contracts under Howey or notes under Reves, and thus fall outside federal securities laws.
DeFi lending transactions lack the essential hallmarks of securities: there is no common enterprise, no reliance on managerial efforts of others, and the transaction is a loan with expectation of interest, not profits.
DeFi lending protocols operate as automated, non-custodial systems facilitating credit intermediation, not capital formation, and forcing them into securities regulation would be a category error with negative consequences for innovation.
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’s Vendor Display Rule (Regulation NMS Rule 603) governs how data vendors must report aggregate market data for trading purposes, but this rule does not currently apply to crypto assets, leaving the market exposed to data quality issues and inconsistent reporting practices.
The document recommends the establishment of a unified identification system for cryptocurrencies;(similar to CUSIP/ISIN for securities) to improve data reliability and facilitate regulatory oversight, supporting ongoing industry initiatives like the Digital Token Identifier Foundation.
There is a potential need for consumer protection regulation in the crypto data market, as current practices may not align with standards required for securities, and selective aggregation or mislabeling by vendors could materially impact trading and investment decisions.
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.
