An official website of the United States government
Here’s how you know
Official websites use .gov
A .gov website belongs to an official government organization in the United States.
Secure .gov websites use HTTPS
A lock
()
or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.
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.
Wintermute urges the SEC to affirm that broker-dealers may trade tokenized securities for their own account, self-clear and settle such trades, and custody proprietary positions using wallet software, without triggering customer protection rules.
The SEC should clarify that providing liquidity or trading tokenized securities on DeFi protocols—whether by U.S. or non-U.S. participants—does not, by itself, require broker-dealer registration or trigger U.S. jurisdiction, absent targeted solicitation.
The SEC should confirm that network tokens (e.g., Bitcoin, Ethereum), which are essential to decentralized protocols, are not securities under the Howey Test, even if initially distributed in fundraising transactions or traded speculatively.
Custody, Public Offerings, Regulatory Sandbox, Security Status, Tokenization, Trading
The framework aligns with U.S. federal directives including NSM-10, the Executive Order of January 2025, and CNSA 2.0, mandating a full migration to post-quantum cryptography (PQC) by 2035 for federal systems, with implications for financial institutions handling sensitive or investor-related data.
PQFIF supports compliance with SEC cybersecurity rules and SAB 121 by integrating quantum-safe protections into digital asset custody systems, ensuring legal finality, investor data confidentiality, and auditability for public companies and investment advisers.
The framework includes a multi-jurisdictional compliance engine that maps and reconciles regulatory requirements across the U.S., EU (DORA, MiCA), and Asia-Pacific, enabling legally valid cross-border operations and mutual recognition of quantum-safe standards.
Custody, Public Offerings, RFI Responses, Security Status, Tokenization
Cryptocurrencies, despite lacking traditional security characteristics, should be subject to disclosure and protection standards akin to those under the Securities Act of 1933 and the Investment Company Act of 1940 due to their accessibility to unsophisticated investors.
The absence of intrinsic value, backing, or cash flow in cryptocurrencies makes them particularly risky and difficult to value using conventional corporate finance methods, necessitating enhanced regulatory scrutiny.
The SEC is urged to initiate a formal notice-and-comment rulemaking process to ensure inclusive public participation and to establish clear regulatory frameworks that promote responsible innovation and market integrity.
Lilya Tessler and Kate Lashley, Sidley Austin LLP on behalf of Ava Labs, Inc. and Owl Explains
Ava Labs proposes a new regulatory category—“Protocol Tokens”—defined as intangible, commercially fungible assets integral to the functioning of a protocol. These tokens should not be classified as securities, regardless of whether they are in a pre-functionality or functional state.
The SEC should adopt a rulemaking framework that presumes offers and sales of Pre-Functionality Protocol Tokens are investment contracts, but allows for rebuttal and provides a new exemption (“Regulation PT”) with tailored disclosure, AML/KYC, and filing requirements.
SEC-registered intermediaries (e.g., broker-dealers, ATSs, NSEs) should be permitted to support Protocol Token activities under existing frameworks, with targeted amendments and interpretive guidance. A transitional grace period should allow such activities pending final rulemaking.
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
Paradigm urges the SEC to issue interpretive guidance confirming that tokenized securities retain their status as securities under federal law, ensuring that blockchain-based issuance does not alter legal obligations under the Securities Act or Exchange Act.
The letter recommends that the SEC clarify and potentially revise transfer agent and recordkeeping rules to accommodate blockchain-based systems, including allowing issuers to act as their own transfer agents and recognizing distributed ledgers as official books and records.
Paradigm proposes updates to registration forms (e.g., Form S-1) and ongoing disclosure requirements to reflect the technical specifics of tokenized securities, including smart contract features, custody mechanisms, and onchain governance, while maintaining investor protection standards.
The OTCM Protocol employs a novel “Howey Shield” framework to ensure its tokens do not meet the definition of a security under the Howey Test, emphasizing the absence of profit expectation and managerial reliance, thus classifying tokens as commodities.
The protocol integrates SEC-registered intermediaries (e.g., Empire Stock Transfer) for custody and compliance, aligning with February 2025 SEC guidance on meme tokens and reinforcing investor protection through professional custody and full KYC/AML procedures.
The OTCM model is proposed as a regulatory template for future safe harbor provisions, demonstrating how asset-backed, entertainment-purposed tokens can operate within existing legal frameworks while revitalizing illiquid markets.
Custody, Public Offerings, Security Status, Tokenization
The letter urges the SEC to distinguish between fundraising tokens (which should be regulated as securities) and protocol/utility tokens (which should not), to avoid overregulation of decentralized infrastructure.
It advocates for treating smart contracts as neutral software infrastructure rather than financial instruments, emphasizing their role in automating logic rather than raising capital.
Firepan emphasizes that software providers like itself should not be subject to securities regulation when they do not engage in custody, compliance, or issuance—those roles should remain with licensed financial entities.
The framework proposes a newly chartered nonprofit SRO operating under SEC oversight, with delegated authority for rulemaking, certification, and sandbox administration, subject to SEC approval and audit.
Introduces a new class of digital securities whose terms evolve based on real-time data from certified oracles (e.g., ESG metrics), with all changes immutably recorded and auditable via a Civic Transparency Portal.
Establishes a legally controlled environment for multi-jurisdictional testing of digital asset components, enabling localized regulatory validation and cross-border interoperability under SEC and SRO governance.
The POLARIS 3.0 Protocol provides a framework for applying U.S. securities laws to digital assets, including objective metrics for the Howey Test and compliance with the Bank Secrecy Act.
Proposal for a Digital Asset SRO under SEC oversight to manage technical certification, identity oracle networks, and regulatory reporting.
Integration of ethical behavioral mapping and compatibility with FATF's "Travel Rule" to enhance anti-money laundering and counter-terrorism financing measures.
The document discusses the significant role of central banks and government policies in financial crises, highlighting the federal bailout of Fannie Mae and Freddie Mac during the 2008-2009 financial crisis.
It emphasizes Bitcoin's aim to establish a decentralized digital currency, independent of traditional financial institutions, through a peer-to-peer network that validates transactions without a trusted third party.
The document addresses the regulatory challenges faced by Bitcoin, including its use in illicit activities and the government's ability to seize and auction Bitcoin, demonstrating that decentralized systems are not immune to regulation.
