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.
NSCP urges the SEC to provide clear, objective criteria for determining whether a digital asset is a security or commodity, warning that current reliance on subjective “facts and circumstances” tests places undue interpretive burdens on compliance officers.
NSCP requests detailed guidance on how SEC-registered investment advisers can comply with Custody Rule 206(4)-2 when using digital asset custodians, particularly regarding the use of omnibus accounts, self-custody, and multi-party computation (MPC) key management.
NSCP emphasizes the need for coordinated rulemaking between the SEC, CFTC, and other regulators to avoid duplicative or conflicting compliance obligations, especially as Congress considers legislation that may assign overlapping jurisdiction.
Custody, Public Offerings, Security Status, Tokenization
The proposal recommends that the SEC define and ban "Non-Compliant Memecoins" based on failure to meet minimum standards such as proof of utility, liquidity lock, third-party audit, AML/KYC compliance, and transparent governance.
It advocates extending principles from the GENIUS Act and Clarity Act—originally designed for stablecoins and DeFi—to memecoins, thereby closing a regulatory gap and aligning with the investor protection mandates of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The proposal outlines a three-phase implementation plan involving rule publication, automated enforcement via oracles and APIs, and full ecosystem compliance with AI-driven monitoring, in coordination with the CFTC for decentralized platforms.
The proposal introduces a phased regulatory sandbox supervised initially by the SEC, with potential pathways to formal safe harbor protections and expedited registration for compliant participants—offering legal clarity and reduced regulatory friction for innovators.
The framework explicitly structures "EduTokens" as non-transferable, non-speculative utility tokens to avoid classification as securities under the Howey Test, referencing precedents like SEC v. Kik and SEC v. Telegram, and aligning with SEC no-action letters.
The proposal outlines a phased inter-agency model led by the SEC, with initial jurisdiction confined to areas of clear SEC authority (e.g., Regulation D offerings), while preserving federal supremacy in conflicts with state law under Article VI of the U.S. Constitution.
Proposes the creation of a Federal Reserve HBAR Reserve & Lending Facility (HRLF), enabling HBAR-denominated loans for infrastructure, energy, and housing, with repayment terms and custody hardened under a Post-Quantum Financial Infrastructure Framework (PQFIF).
Assigns the SEC responsibility for monitoring issuance, custody, and lending structures involving HBAR, ensuring regulatory compliance within a post-blockchain framework.
Advocates for a national program (“HBAR in American Homes”) encouraging U.S. households to accumulate HBAR as a pro-dollar collateral layer, aiming to decentralize supply and reinforce U.S. monetary sovereignty.
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.
