Re: Comments on the Sec Crypto Task Force’s Questions Concerning Broker-Dealer Capital and Recordkeeping Requirements for Crypto Assets

The letter addresses two main questions:

1. How should a given crypto asset be evaluated to assess whether it is readily convertible into cash?
2. How should crypto assets be evaluated to determine the appropriate haircut to apply?

The letter provides a comprehensive framework for evaluating crypto assets and proposes the following:

• Crypto assets should be considered for the same deductions as traditional financial assets to the extent that the same liquidity concerns or operational risks exist.
• A broker-dealer should be required to establish, maintain, and enforce reasonably designed written policies, procedures, and controls to demonstrate title to and exclusive control over the crypto assets it holds in custody.
• A ready market exists for any crypto asset that has maintained market capitalization above a specified level over at least the previous six months, based on data from one or more Covered Exchanges.
• The haircut for crypto assets should be based on a balance between liquidity, simplicity, and consistency or parity across comparable asset categories.

The letter also addresses recordkeeping requirements for broker-dealers and proposes that:

• The Commission should consider clarifying that blockchains or distributed ledgers can be used as electronic recordkeeping systems for the purposes of Rule 17a-4.
• Broker-dealers who rely on a blockchain or distributed ledger for recordkeeping should be required to specify in writing the types of records enumerated under Rule 17a-3 and Rule 17a-4 for which they rely on the blockchain.
• The Commission should consider setting forth its expectations on what constitutes "easy access" or "produceability to the Commission and its staff" for the purposes of Rules 17a-4(a) and 17a-4(b).

The letter concludes by expressing appreciation for the opportunity to provide comments and looking forward to continued engagement with the Commission.