Crypto Task Force Written Input

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.

Date Written Input Topic(s) Key Points
Jonathan Schmalfeld, Daniel McAvoy, and Stephen Rutenberg, Polsinelli PC

Re: Scoping Out 		RFI Responses, Safe Harbor, Security Status, Tokenization
  • The letter urges the SEC to clarify that tokenizing or creating a cryptographically authenticated digital representation of an asset does not convert a non-securities transaction into a securities transaction.
  • TDC recommends that the SEC issue formal guidance and commence rulemaking to exempt bona fide consumer sales of goods and services (including NFTs) from securities laws where no profit or equity interest is offered and there is no contractual obligation for repayment.
  • TDC suggests that the SEC provide formal guidance on the application of securities laws to stablecoins and wrapped tokens, ensuring that these digital assets are not unnecessarily classified as securities or investment contracts.
Kecheng Lai, Knowpia Inc.

RE: Recommendation Letter - Legal Pathway for End User Distribution Tokens Prior to Rulemaking under the CLARITY Act 		Safe Harbor, Security Status, Tokenization, Trading
  • Establishment of a provisional EUD Token Certification process for self-certifying tokens under the CLARITY Act.
  • Implementation of a No-Action Letter mechanism to confirm SEC non-enforcement for compliant EUD token projects.
  • Recognition of EUD tokens as non-securities, allowing their use for payments, rewards, and on-platform utility.
     
Lilya Tessler and Sonia Barros, Sidley Austin LLP, on behalf of The Digital Chamber

Public Offerings of Investment Contracts and Related Disclosure 		Public Offerings, RFI Responses, Security Status
  • The SEC should issue targeted relief for public offerings of investment contracts involving Tokens, including guidelines for material information disclosure.
  • Investment contracts are not equity securities and require bespoke disclosures distinct from traditional equity securities.
  • Tailored disclosure requirements should be developed for investment contracts involving Tokens, with disclosures made at the time of the offering and updated as necessary.
Blockchain Association

Written Input Regarding Investment Adviser Custody-Related Topics 		Custody, RFI Responses, Security Status, Tokenization, Trading
  • The Blockchain Association (BA) recommends that the SEC amend the RIA Custody Rule to allow registered investment advisers (RIAs) to choose between self-custody and third-party custody of crypto assets, subject to appropriate safeguards.
  • BA suggests expanding the definition of "qualified custodians" to include state-registered trust companies, state banks, and other appropriately registered crypto asset-native custodians.
  • BA advocates for a principles-based approach to crypto asset custody, allowing RIAs to leverage technological advances and adopt tailored safeguards for client assets based on specific custody practices and circumstances.
The Digital Chamber

Re: Crypto Custody under the Investment Company Act of 1940 		Crypto ETPs, Custody, RFI Responses, Security Status, Trading
  • The Commission should provide guidance that state-chartered trust companies and similar institutions qualify as "banks" for purposes of Section 17(f) of the Investment Company Act of 1940.
  • The definition of "custody" under the 1940 Act with respect to crypto assets should mean possession of the private keys associated with such assets.
  • The Commission should propose a custody rule specifically tailored to the unique characteristics of crypto assets, including the use of multi-signature wallets and cold storage solutions.
     
Rita Mitchell, Georgia Society of CPAs

Letter to the Crypto Task Force 		Custody, Regulatory Sandbox, Security Status, Trading
  • Lack of transparency and adequate disclosure requirements for transactions triggering "security concerns".
  • Need for clear regulatory guidelines on investor recourse and exchange's right to freeze accounts.
  • Specific disclosure and communication requirements for locking investor accounts, including reasons, steps, and timeline for resolution.
Matthew B. Comstock, Willkie Farr & Gallagher LLP

RE: Special Purpose Broker-Dealers and Financial Responsibility Matters 		Custody, RFI Responses, Safe Harbor, Security Status, Trading
  • The Digital Chamber (TDC) requests the SEC to issue permanent guidance and amend existing rules to clarify how Special Purpose Broker-Dealers (SPBDs) and other broker-dealers may custody crypto asset securities and non-security crypto assets.
  • TDC advocates for a technology-neutral, principles-based approach to broker-dealer custody of crypto asset securities, ensuring exclusive control over such assets through various methods, including key sharding and multi-signature wallets.
  • TDC requests the SEC to confirm that all broker-dealers, including SPBDs, may custody non-security crypto assets and facilitate trading in both crypto asset securities and traditionally represented securities.
CoinShares International Limited

RE: It’s Time to Modernize the RIC Tax Rules 		Crypto ETPs, Crypto Lending, Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
  • Ease the asset diversification requirements in Subchapter M to allow more flexibility for funds.
  • Expand the types and amounts of income that funds can receive without losing regulated investment company (RIC) status.
  • Modify the RIC excise tax distribution requirements to reduce compliance costs impacting investment returns.


 
CoinShares International Limited

RE: Letter to Crypto Task Force 		Crypto ETPs, Custody, Public Offerings, Security Status, Trading
  • CoinShares International Limited discussed the structure and regulatory compliance of their European digital asset ETPs, highlighting their fully collateralized and bankruptcy-remote nature.
  • CoinShares emphasized the importance of staking rewards for investors in spot proof of stake digital asset ETPs and recommended that the SEC avoid setting arbitrary limits on staking percentages.
  • CoinShares requested the SEC to revoke the 2018 open letter from Division of Investment Management Director Dalia Blass, which constrains registered investment advisors' ability to invest in digital assets.
PraSaga Foundation

SagaStandards: Transforming Finance with a Global Standards Registry 		Custody, Public Offerings, Regulatory Sandbox, Security Status, Tokenization, Trading
  • Implementation of open standards for tokenized finance to enhance transparency and reduce fraud.
  • Potential savings of $155B-$316B annually through reduced transaction fees, fraud, and operational costs.
  • Collaboration with international standards organizations (ISO, FIX, XBRL, ISDA) to align financial reporting and trading standards.