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
Andreessen Horowitz, a16z

Re: Comments on the SEC Crypto Task Force’s Questions Concerning the Custody of Crypto Assets
Custody, RFI Responses, Security Status
  • The Commission should provide new guidance to facilitate custody arrangements for crypto assets, even if only as a temporary measure until it issues new rules.

  • The Commission should permit RIAs to self-custody security tokens and clarify that the self-custody of crypto assets by RIAs would not conflict with the Custody Rule or fiduciary duties.

  • Custodial requirements should clearly distinguish between different categories of crypto assets while ensuring that non-security crypto assets are custodied in a manner that is substantially as secure as crypto asset securities.

Adele Faure & Laura Brookover, OpenSea

Re: Securities Exchange and Broker Status of NFT Marketplaces
Custody, Security Status, Trading
  • NFTs are not securities under the Exchange Act, primarily because they are collectibles or art purchased for consumption, novelty, or aesthetic value rather than for investment.

  • OpenSea does not qualify as an exchange because it does not bring together multiple sellers of the same asset and does not provide a trading facility or set rules for non-discretionary order interactions.

  • OpenSea is not a broker as it does not solicit investments, negotiate or execute transactions, custody customer assets, or provide financing arrangements, trade documentation, or asset valuations.

Figure Markets

Re: The Use of YLDS as a Settlement Mechanism for Non-Security Transactions
Custody, Security Status, Tokenization, Trading
  • The use of Figure Transferable Certificates (YLDS) as a payment mechanism for non-security crypto transactions on the Crypto Platform does not require registration as a broker, securities exchange, or alternative trading system.

  • YLDS are registered securities under the U.S. Securities Act and are issued by a registered investment company, providing protections and disclosures under the Securities Act and the Investment

  • The Crypto Platform facilitates peer-to-peer transactions in non-security crypto assets, and the use of YLDS as a payment method is optional and does not constitute "effecting" securities transactions.

Margaret Rosenfeld, Everstake, Inc.

Letter to the Crypto Task Force
Custody, RFI Responses, Safe Harbor, Security Status, Trading

  • Everstake requests clear guidance affirming that staking and appropriately structured non-custodial staking services do not constitute securities offerings.
  • The letter outlines why staking and non-custodial staking services meet the criteria of an investment contract under the Howey Test.
  • Everstake urges the Commission to issue formal guidance regarding the application of federal securities laws to non-custodial staking services.
     
Kecheng Lai, Knowpia Inc.

RE: The Future is Here, Now! A Comprehensive Examination of the STO+ Framework and its Regulatory Implications
Custody, Public Offerings, Regulatory Sandbox, RFI Responses, Safe Harbor, Security Status, Tokenization, Trading
  • The STO+ token model aims to ensure compliance with existing legal frameworks while fostering innovation that benefits both investors and users.
  • The conversion mechanism between ST and ST+ tokens is designed to be lawful and beneficial to investors, aligning with existing securities law requirements.
  • The application of SEC Rule 144 one-year lock-up period to ST+ tokens is deemed inappropriate and counterproductive for the STO+ framework.
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.
     
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.
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.
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.