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
DeFi Education Fund

Re: Token Safe Harbor Guiding Principles 		RFI Responses, Safe Harbor, Security Status, Tokenization, Trading
  • The Safe Harbor should be technology-agnostic, focusing on substance over form and associated risks rather than specific technologies.
  • Eligibility criteria for the Safe Harbor should be broad and inclusive, accommodating a wide range of technologies and projects.
  • Disclosure requirements should be carefully calibrated to provide material information to token holders while being commercially feasible for initial development teams.
Kecheng Lai, Knowpia Inc.

Recommendation Letter - Supplementary Clarification No. 5: Comparative Analysis and Final Recommendation on Dual-Nature vs Conversional Dual-Token Models under STO+ Framework 		Security Status, Tokenization, Trading
  • The Unified Dual-Nature Token Model dynamically transforms between utility and security states based on context and user action.
  • The Conversional Dual-Token Model involves two distinct tokens (ST+ for utility and ST for security) with controlled two-way conversion mechanisms.
  • The recommendation is for the SEC to consider the Unified Dual-Nature Token Model as it aligns with SEC principles and offers regulatory clarity while promoting digital asset utility and investor protections.
OpenZeppelin

Recommendations Regarding Independent Security Audit Reports 		Custody, RFI Responses, Safe Harbor, Security Status, Tokenization, Trading
  • Implement mandatory third-party security audits for blockchain protocols to ensure compliance with security standards and reduce risks.
  • Require detailed documentation of protocols, including governance mechanisms, technical specifications, and security measures.
  • Establish a global organization to formalize auditing standards and certify qualified auditors for blockchain technology.
Neel Maitra, Dechert LLP

Crypto Asset Custody By Investment Advisers After The Sec’s Proposed Safeguarding Rule 		Custody, Safe Harbor, Security Status, Tokenization, Trading
  • The SEC's proposed Safeguarding Rule aims to expand the Custody Rule by requiring RIAs to maintain all client assets, including crypto assets, with qualified custodians.
  • The Safeguarding Rule introduces new definitions for "possession or control" of assets and specifies several assurances that RIAs must receive from custodians.
  • The Rule proposes exemptions for certain assets, such as privately offered securities and physical assets, from the qualified custodian requirement, provided specific conditions are met.
     
Charles W. Mooney, Jr., University of Pennsylvania Carey Law School

Final Report on the Work of the Task Force on Securities Holding Infrastructure: Part Two* 		Custody, Security Status, Trading
  • The intermediated securities holding infrastructure in the United States has been developed to address the problems of the direct-holding system, primarily to facilitate trading, clearance, and settlement for securities transactions in the public securities markets.
  • The Task Force recommends an independent benefit-cost analysis and study of the securities holding infrastructure to assess the problems and potential modifications, including the preservation of current benefits and the roles of existing market participants.
  • The report identifies two main problems with the current infrastructure: the lack of transparency in identifying beneficial owners and the absence of privity between beneficial owners and issuers, which impairs the exercise of legal entitlements.
     
Charles W. Mooney, Jr., University of Pennsylvania Carey Law School

Beyond Intermediation: A New (Fintech) Model For Securities Holding Infrastructures 		Custody, Security Status, Tokenization, Trading
  • The article presents a comprehensive analysis of the legal attributes and implications of intermediated securities holding infrastructures, highlighting the risks and costs imposed by these systems.
  • It proposes a new platform system (NPS) that would connect investor holdings directly to issuers, reducing intermediary risk and facilitating the shortening of custody chains across international borders.
  • The article discusses the potential for distributed ledger technology (DLT) to improve securities holding infrastructures by reducing intermediary risk and enhancing transparency.
     
Vanguard Global Holdings LLC

RE: Comment on Conditional and Time-Limited Exemptions for Blockchain Innovation – In Response to Acting Chair Mark T. Uyeda’s April 11, 2025 Remarks 		Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
  • Proposal for a conditional exemption for Initial Coin Offerings (ICOs) to facilitate early-stage fundraising for blockchain projects.
  • Implementation of a mandatory basic registration system for entities operating under the exemption to ensure oversight and prevent misuse.
  • Establishment of a public-facing verification tool by the SEC to enhance transparency and investor protection.
     
Michael Guttentag, LMU Loyola Law School

RE: The Importance of Distinguishing Between Doctrinal and Functional Answers 		Public Offerings, Regulatory Sandbox, Security Status
  • The distinction between doctrinal and functional analysis is crucial for effective regulation of crypto assets.
  • Doctrinal analysis focuses on legal precedents and statutory interpretation, while functional analysis considers the practical effects of regulatory interventions.
  • Clear differentiation between doctrinal and functional answers can help in making sound policy choices for crypto asset regulation.
     
Metrika, Inc.

Re: Operational Risk Considerations for Digital Asset Innovation in Traditional Financial Markets 		Custody, Public Offerings, RFI Responses, Tokenization, Trading
  • Tokenization of traditional securities on blockchain protocols introduces new operational risks and challenges that need to be addressed to ensure robust investor protection and minimal disruption to capital formation.
  • The SEC should consider implementing specific digital asset custody requirements for investment advisers and broker-dealers, encompassing key management and risks inherent to blockchain networks.
  • Real-time risk management strategies are essential for investment advisers, broker-dealers, and custodians dealing with digital asset securities to promptly identify and respond to emerging threats
Grace H. Lin & Tris R. Sebesta, The George Washington University Law School

Change Is Calling: A Contemporary Commission To Confront Cryptic Crypto Conditions 		Custody, Public Offerings, Regulatory Sandbox, Security Status, Trading
  • The proposal suggests establishing a new agency, the Federal Digital Asset Commission (FDAC), to provide clear regulatory guidelines and oversight specifically tailored to digital assets.
  • FDAC will implement a tiered licensing structure for crypto-asset service providers (CASPs) and enforce compliance through audits, cybersecurity measures, and financial stability requirements.
  • The document emphasizes the importance of creating a digital asset classification framework to prevent prolonged disputes and ensure market regulation clarity.