Oct. 16, 2026
Re: File No. S7-2026-27 - Regulation Crypto Assets I am writing as a market-infrastructure practitioner who has worked in financial markets, fintech, and software since 1995, including time at Bloomberg and Merrill Lynch, and as the operator of a market-intelligence platform that consumes offering and trading data daily. I have no client position in this rulemaking; my interest is a workable disclosure and capital-formation regime for crypto assets. 1. The direction is right. Clarity delivered through rulemaking is preferable to clarity delivered through enforcement. The proposed framework's focus on "covered investment contracts," rather than on the underlying crypto assets themselves, is the correct unit of analysis. It matches how market participants actually underwrite risk. 2. Federal preemption will do real work. Layered state registration for a qualifying covered offering adds compliance cost without adding investor protection. Preemption of specified state registration and qualification requirements is one of the most practically valuable parts of the proposal, and I support it. 3. Make the crypto-specific disclosure standardized and machine-readable. The proposal's disclosure requirements should mandate a common, structured set of fields across issuers: token supply and issuance schedule, allocation to insiders and early holders, vesting and lockup terms, and a single authoritative statement of development and functionality representations. Today those facts are scattered across whitepapers, websites, and social media, often in mutually inconsistent forms, which is exactly what makes diligence expensive for investors and data providers alike. Standardized disclosure also lets the Commission measure whether the disclosure regime is working. At the same time, the paperwork burden questions the release raises are well placed: the startup exemption should stay light-touch, or the smallest issuers will simply not use it. 4. The safe harbor needs an objective end to the investment contract. Proposed Rule 400's safe harbor for determining when a crypto asset is no longer subject to an investment contract is the load-bearing wall of this framework, and it should not be rebuilt on a facts-and-circumstances managerial-efforts test. If the exit test is subjective, issuers get the same uncertainty the rule is meant to retire, and the exemption paths become unusable for anyone without a securities lawyer on retainer. Objective milestones, such as functional-network and decentralization thresholds the Commission can verify, would give issuers, secondary-market participants, and investors a bright line to plan around. 5. Keep bad-actor disqualification proportionate. Disqualification provisions should track the existing Regulation D bad-actor framework closely. Crypto teams skew young and small; a bespoke, broader disqualification standard would screen out legitimate issuers without improving investor protection. 6. Address secondary trading. Exemptions for primary offerings are welcome, but most investor harm and most market-structure questions live in secondary trading. The proposal should say clearly how covered investment contracts may trade after the offering, and on what venues, rather than leaving that to companion guidance that arrives later. Temporary exemptive relief for onchain trading is a start, but the final rule should not leave secondary markets as an afterthought. 7. Retaining antifraud and antimanipulation liability is correct. Fraud enforcement should never depend on whether an offering was registered. Keeping issuers subject to the antifraud and antimanipulation provisions of the federal securities laws preserves the investor-protection core of the framework while the exemptions do the capital-formation work. Respectfully submitted, James Tylee St. Marys, Georgia