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
Dimitry Jean-Noel II

RE: The Future of Global Financial Systems: Integration of Traditional Finance and Decentralized Technologies 		Custody, Security Status, Tokenization, Trading
  • Blockchain-based settlement systems are revolutionizing transaction processing by eliminating intermediaries, reducing settlement times, and enhancing transparency.
  • Asset tokenization is transforming ownership representation, enabling fractional ownership, increased liquidity, and streamlined transactions.
  • Quantum computing threats necessitate immediate preparation for quantum-resistant cryptography to protect current cryptographic systems underpinning financial security.
Dimitry Jean-Noel II

RE: Securing Digital Dollar Dominance: A Comprehensive Framework for Stablecoin Regulation and Innovation 		Custody, Regulatory Sandbox, Safe Harbor, Security Status, Tokenization, Trading
  • The framework mandates 100% reserve backing with high-quality liquid assets, including cash, Treasury bills, and overnight reverse repurchase agreements.
  • It requires stablecoin issuers to maintain robust liquidity management, including stress testing and contingency funding plans.
  • The framework establishes clear redemption rights for stablecoin holders, ensuring they can redeem at par value within specified timeframes.
     
Vanguard Global Holdings LLC

RE: Contribution to Safe Harbor & Security Status 		Public Offerings, Safe Harbor, Security Status
  • Vanguard Global Holdings LLC supports the SEC initiative to create a clear regulatory framework for the cryptocurrency industry.
  • The company advocates for the creation of a "Safe Harbor" for crypto assets to provide a secure platform for ICOs and IDOs.
  • Vanguard Global Holdings LLC proposes that cryptographic tokens should be considered commodities rather than securities.
     
Jason Berkun, George Washington University Law School

Re: A Legal Basis for Interpreting the Definition of an Exchange to Exclude a Decentralized Exchange Operating an Automated Market Maker 		Crypto Lending, Custody, Security Status, Trading
  • The Securities Exchange Act of 1934's definition of an "exchange" does not extend to decentralized exchanges (DEXs) operating automated market makers (AMMs) because peer-to-peer transaction protocols do not resemble traditional stock exchanges.
  • Registration and regulation frameworks intended for stock exchanges are incompatible with DEXs and fail to provide adequate investor protections for using a DEX.
  • Congress should amend the Exchange Act to provide tailored regulatory oversight of securities transactions on DEXs.
Kiln

Re: There Must Be Some Way Out of Here 		Crypto ETPs, Crypto Lending, RFI Responses, Security Status, Tokenization, Trading
  • Kiln argues that Proof-of-Stake (PoS) blockchain activities, such as staking, do not involve the offer and sale of securities under the Securities Act and Exchange Act.
  • Kiln emphasizes that staking rewards are protocol-defined and not derived from the managerial efforts of others, thus falling outside the scope of the Howey test for investment contracts.
  •  Kiln supports regulatory clarity that distinguishes between core blockchain infrastructure activities and traditional securities transactions.
John Schoenecker, Taxbit

RE: Written Input to the Crypto Task Force 		Custody, RFI Responses, Safe Harbor, Security Status, Trading
  • The PROOF Act introduced by Senators Tillis and Hickenlooper requires digital asset exchanges and custodians to submit periodic proof of reserves (PoR) inspections by a neutral third party to the Treasury.
  • Real-time on-chain PoR reporting can prevent misappropriation of assets, as demonstrated by the FTX scandal.
  • Auditors of digital assets should verify them by tracking and confirming their existence on entity-owned and controlled blockchain wallet addresses.
Professor Edward Lee, Santa Clara University School of Law

Re: Recommendations for Treatment of NFTs for Digital Art Under Securities Law and the First Amendment 		Public Offerings, Security Status, Tokenization
  • NFTs for digital art do not constitute investment contracts under the Securities Act of 1933.
  • Requiring securities registration of NFTs for digital art violates the First Amendment by imposing prior restraints on creators of artistic expression.
  • The SEC should issue public guidance stating that NFTs used for digital art do not constitute securities or “investment contracts.”
Kechang Lai, Knowpia Inc.

Recommendation Letter - Supplementary Clarification No. 3 - Recommendation for Operational Structure and Clarification of STO+, ST, and ST+ Mechanisms 		Custody, Security Status, Tokenization, Trading
  • ST tokens are subject to lock-up periods under Reg D, Reg CF, and other relevant securities laws.
  • KYC and AML verification are mandatory for all ST token holders before receiving their tokens.
  • Smart Contracts govern the issuance, transfer, and conversion of ST and ST+ tokens, ensuring compliance with SEC regulations.
Ronald Hale

Letter to the Crypto Task Force 		Custody, Public Offerings, Regulatory Sandbox, Security Status, Tokenization, Trading
  • The SEC should implement a ban list of individuals and entities known for exploiting investors, similar to stock market practices, and require regulated entities to screen against it.
  • Stablecoins need regular auditing and reserve transparency, while meme coins should face stricter scrutiny due to their speculative nature.
  • DAOs should have clear governance and voting transparency, and mining regulations could promote sustainable practices.
     
Global Legal Entity Identifier Foundation (GLEIF)

A Response by the Global Legal Identifier Foundation (GLEIF) to the Securities and Exchange Commission’s Crypto Task Force 		Custody, RFI Responses, Security Status, Tokenization, Trading
  • The LEI (Legal Entity Identifier) is a 20-character, alpha-numeric code based on the ISO 17442 standard, which uniquely identifies a legal entity and is nonproprietary.
  • The vLEI (Verifiable Legal Entity Identifier) is a cryptographically verifiable version of the LEI, providing automated and nonrepudiable verification of an organization’s identity and the persons acting on its behalf.
  • The costs of obtaining and renewing an LEI are governed by a cost-recovery model, requiring review and approval by GLEIF.