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
Ripple

Letter on Regulatory Sandboxes 		Custody, Regulatory Sandbox, Tokenization, Trading
  • Regulatory sandboxes allow digital asset products to operate in a controlled environment while subject to regulatory oversight.
  • Sandboxes should simulate production-like conditions, enabling firms to test products under real market environments.
  • Insights from sandboxes should feed into rulemaking processes, providing regulatory certainty for firms post-sandbox.
Lilya Tessler, Sidley Austin LLP on behalf of Ava Labs, Inc. and Owl Explains

Supplemental Submission Proposing a Nature of the Activity Test to Determine Whether Infrastructure Providers Need to Register as Securities Intermediaries 		Custody, RFI Responses, Security Status, Tokenization, Trading
  • The submission proposes a nature of the activity test to determine whether infrastructure providers need to register as securities intermediaries.
  • The test aligns with existing statutory definitions, the Howey framework, and decades of SEC Staff no-action guidance for analogous activities.
  • The submission argues that infrastructure providers should not be misclassified merely because their activities take place on the blockchain or involve crypto assets.
Charles W. Mooney, Jr., University of Pennsylvania Carey Law School

Potential Exemptive Order: Tokenization of Traditional Securities 		Custody, Regulatory Sandbox, Safe Harbor, Tokenization, Trading
  • The potential SEC exemptive order for tokenized securities could unintentionally entrench the monopoly of the current intermediated securities holding infrastructure.
  • The current intermediated holding system imposes substantial costs on issuers and investors, which could be alleviated by a direct-holding model.
  • An independent study is recommended to assess the current securities holding infrastructure and explore potential reforms, including the implementation of a direct-holding model.
Etherfuse, Brogan Law PLLC

Toward a Framework for Tokenized Sovereign Bonds 		Custody, Public Offerings, Regulatory Sandbox, RFI Responses, Security Status, Tokenization, Trading
  • Etherfuse Stablebonds are tokenized bonds backed by sovereign bonds maintained in audited, transparent collateral reserves and are legally offered in Mexico through a resolution from the Mexican financial authority (CNBV).
  • Etherfuse prohibits U.S. Persons from accessing Stablebonds, implementing geofencing and KYC checks to ensure compliance with this limitation.
  • The document proposes that the SEC provide exemptive relief under Section 28 of the Securities Act of 1933 to allow unregistered offering of certain sovereign bonds classified as "Qualifying Foreign Government Securities" (QFGSs).
Margaret Rosenfeld, Everstake, Inc.

Re: Crypto Task Force Meeting 		Custody, RFI Responses, Security Status, Trading
  • Staking is central to the functioning of proof-of-stake blockchain networks and should not be mischaracterized as an investment or financial contract.
  • Misclassification or overregulation of staking could weaken blockchain infrastructure, reduce validator participation, and drive activity offshore.
  • Non-custodial staking services help decentralize stake distribution and mitigate systemic risks by empowering individual token holders to retain control over their assets.
Mohamed ElBendary

Uniswap Protocol V4 Hook-based On-Chain Policy Orchestration Architecture 		Custody, Security Status, Tokenization, Trading
  • The Hook Manager framework enables the implementation of complex business rules through modular, customizable, and upgradeable policy-specific hook contracts.
  • The proposed decentralized governance model, potentially utilizing the UNI token, oversees the registration and management of policy hooks, ensuring community alignment.
  • The architecture enhances security by isolating concerns and facilitates features critical for institutional adoption and Real-World Asset (RWA) integration.
Brandon H. Ferrick, Douro Labs LLC

Re: Non-Custodial Trading Interfaces Should Not be Considered “Brokers” or “Exchanges” under Federal Securities Laws 		Custody, Regulatory Sandbox, Safe Harbor, Security Status, Trading
  • Non-custodial trading interfaces (NTIs) should not be considered "brokers" or "exchanges" under federal securities laws as they do not control or custody user funds, solicit transactions, or provide personalized investment recommendations.
  • NTIs act solely as technological tools that enable users to draft and optimize transactions without intermediating trades or exercising control over the underlying protocol.
  • The SEC is requested to issue guidance confirming that NTIs are not required to register as brokers or exchanges, ensuring clarity and fostering innovation in non-custodial platforms.
Figure Markets Holdings, Inc. and Figure Certificate Company

Re: The Use of YLDS Trading Pairs as a Settlement Mechanism for Non-Security Transactions 		Custody, Security Status, Tokenization, Trading
  • The use of YLDS trading pairs as a settlement mechanism for non-security crypto transactions does not require the registration of the Crypto Platform as a broker, securities exchange, or alternative trading system (ATS).
  • YLDS are registered under the U.S. Securities Act of 1933 and the Investment Company Act of 1940, providing holders with protections and disclosures under federal securities laws.
  • The Crypto Platform facilitates peer-to-peer transactions in non-security crypto assets, and the use of YLDS as a settlement mechanism is optional and does not constitute "effecting" transactions in securities.
Figure Markets Holdings, Inc. and Figure Certificate Company

Re: AML/KYC Compliance Requirements for Peer-to-Peer Transactions of YLDS 		Custody, Security Status, Tokenization, Trading
  • FCC is not required to perform AML/KYC on counterparties to peer-to-peer transactions involving YLDS, as FCC is not a "financial institution" under the Bank Secrecy Act (BSA) and FinCEN regulations.
  • Even if FCC were subject to BSA/AML requirements, peer-to-peer transaction counterparties are not considered "customers" of FCC under the relevant FinCEN rules applicable to mutual funds.
  • Requiring FCC to perform AML/KYC on peer-to-peer transaction counterparties would impose significant compliance costs and place FCC at a competitive disadvantage compared to other stablecoin issuers.
GUARDD, Inc.

Comment Letter – Tokenization, Secondary Trading, and Structured Disclosure Compliance Frameworks 		Custody, Public Offerings, Tokenization, Trading
  • The SEC should recognize modern disclosure platforms under state manual exemption regimes to replace outdated paper-based publishers, facilitating lawful secondary trading of tokenized and exempt securities.
  • The SEC should permit broker-dealers and ATSs to rely on structured digital disclosures under Rule 15c2-11, enhancing compliance and transparency in secondary markets.
  • The SEC should extend federal preemption to secondary trading of securities from issuers current in Reg A reporting, particularly when such reporting is conducted via structured platforms like GUARDD.