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
Dylan Lowe, Davis Wright Tremaine LLP

RE: Comment on Regulatory Framework for Digital Assets and Tokenized Securities 		Custody, Regulatory Sandbox, Safe Harbor, Security Status, Tokenization

  • The letter requests the SEC to issue interpretive guidance or no-action letters for tokenized insurance-backed bonds to provide legal clarity and support innovation.
  • It proposes the creation of a regulatory sandbox or pilot program for developing and testing tokenized insurance products in a controlled environment.
  • The letter recommends updating the SEC's "Framework for 'Investment Contract' Analysis of Digital Assets" to explicitly address tokenized real-world assets like insurance products.
     
Deborah Djeu, Arca

RE: “That’s Our Two Satoshis” - Fixing Token Valuations: Arca Proposes Adjusted Market Cap Standard 		Security Status, Tokenization, Trading
  • Arca proposes an adjusted market cap standard to address the incorrect calculation of market cap by other services.
  • The document emphasizes the need for a more effective methodology to account for the number of tokens actually issued, outstanding, and held back by the Treasury.
  • Arca introduces the term "Adjusted Market Cap" to provide a more accurate representation of a token's market value, considering factors like issued tokens, locked tokens, and tokens held by private investors.
Roberto Braceras, Fidelity Investments

Re: Request for Information on There Must Be Some Way Out of Here 		Crypto Lending, Custody, RFI Responses, Safe Harbor, Trading
  • Fidelity supports the withdrawal of the Joint Staff Statement on Broker-Dealer Custody of Digital Asset Securities and recommends identifying best practices for broker-dealers that custody digital assets.
  • Fidelity urges the SEC to clarify that a broker-dealer may offer its customers a fully-paid lending program for digital assets.
  • Fidelity recommends establishing a safe harbor to support secondary trading of digital assets that are not investment contracts.
David E. Rutter, R3

Letter to the Crypto Task Force 		Regulatory Sandbox, Security Status, Tokenization, Trading
  • R3 supports the SEC's regulatory clarity and pro-innovation mindset, emphasizing the importance of regulatory clarity for crypto assets to build institutional confidence.
  • R3 advocates for the establishment of a regulatory sandbox for digital assets, highlighting its value in facilitating innovation and providing a controlled environment for regulatory observation.
  • R3 underscores the significance of international cooperation in regulating crypto markets to ensure investor protection, market integrity, and systemic risk oversight.
SIFMA

Re: Requests for Exemptive Relief from the Federal Securities Laws for Tokenized Equities and Other Digital Assets 		RFI Responses, Security Status, Tokenization, Trading
  • SIFMA urges the SEC to reject requests for immediate no-action or exemptive relief for tokenized equities and other digital assets, advocating for a more substantive notice and comment process instead.
  • SIFMA emphasizes the importance of retaining investor protections provided under federal securities laws, particularly when considering new forms of technology and trading platforms.
  • SIFMA highlights the need for public debate on policy questions related to the trading of tokenized NMS securities, including the application of Regulation NMS and the potential impact on market transparency and liquidity.
Jonathan Schmalfeld, Daniel McAvoy, and Stephen Rutenberg, Polsinelli PC

Re: Scoping Out 		RFI Responses, Safe Harbor, Security Status, Tokenization
  • The letter urges the SEC to clarify that tokenizing or creating a cryptographically authenticated digital representation of an asset does not convert a non-securities transaction into a securities transaction.
  • TDC recommends that the SEC issue formal guidance and commence rulemaking to exempt bona fide consumer sales of goods and services (including NFTs) from securities laws where no profit or equity interest is offered and there is no contractual obligation for repayment.
  • TDC suggests that the SEC provide formal guidance on the application of securities laws to stablecoins and wrapped tokens, ensuring that these digital assets are not unnecessarily classified as securities or investment contracts.
Kecheng Lai, Knowpia Inc.

RE: Recommendation Letter - Legal Pathway for End User Distribution Tokens Prior to Rulemaking under the CLARITY Act 		Safe Harbor, Security Status, Tokenization, Trading
  • Establishment of a provisional EUD Token Certification process for self-certifying tokens under the CLARITY Act.
  • Implementation of a No-Action Letter mechanism to confirm SEC non-enforcement for compliant EUD token projects.
  • Recognition of EUD tokens as non-securities, allowing their use for payments, rewards, and on-platform utility.
     
Lilya Tessler and Sonia Barros, Sidley Austin LLP, on behalf of The Digital Chamber

Public Offerings of Investment Contracts and Related Disclosure 		Public Offerings, RFI Responses, Security Status
  • The SEC should issue targeted relief for public offerings of investment contracts involving Tokens, including guidelines for material information disclosure.
  • Investment contracts are not equity securities and require bespoke disclosures distinct from traditional equity securities.
  • Tailored disclosure requirements should be developed for investment contracts involving Tokens, with disclosures made at the time of the offering and updated as necessary.
Blockchain Association

Written Input Regarding Investment Adviser Custody-Related Topics 		Custody, RFI Responses, Security Status, Tokenization, Trading
  • The Blockchain Association (BA) recommends that the SEC amend the RIA Custody Rule to allow registered investment advisers (RIAs) to choose between self-custody and third-party custody of crypto assets, subject to appropriate safeguards.
  • BA suggests expanding the definition of "qualified custodians" to include state-registered trust companies, state banks, and other appropriately registered crypto asset-native custodians.
  • BA advocates for a principles-based approach to crypto asset custody, allowing RIAs to leverage technological advances and adopt tailored safeguards for client assets based on specific custody practices and circumstances.
The Digital Chamber

Re: Crypto Custody under the Investment Company Act of 1940 		Crypto ETPs, Custody, RFI Responses, Security Status, Trading
  • The Commission should provide guidance that state-chartered trust companies and similar institutions qualify as "banks" for purposes of Section 17(f) of the Investment Company Act of 1940.
  • The definition of "custody" under the 1940 Act with respect to crypto assets should mean possession of the private keys associated with such assets.
  • The Commission should propose a custody rule specifically tailored to the unique characteristics of crypto assets, including the use of multi-signature wallets and cold storage solutions.