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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.
Recommends a full-reserve Bitcoin custody regime requiring custodians to maintain sufficient unencumbered BTC to satisfy customer entitlements, with legal segregation, defined insolvency treatment, liability-inclusive verification, and independent assurance over assets, liabilities, liens, and off-chain obligations.
Calls for affirmative customer consent before lending, pledging, or rehypothecating custody-only Bitcoin, along with clear product labeling and disclosure standards distinguishing custody services from yield-bearing or lending arrangements.
Proposes regulatory evaluation of spot Bitcoin short-sale locate-and-borrow requirements and enhanced oversight of leveraged derivatives through transparency, surveillance, margin controls, and potential leverage limits, while recognizing the need to preserve legitimate hedging and price-discovery functions.
The paper’s core legal framework is that federal securities law should turn on post-deposit control and investor reliance, not labels. It argues that where vault architecture constrains or eliminates managerial discretion through immutable code, timelocks, withdrawal rights, and transparent rules, the rationale for Securities Act, Investment Company Act, and Advisers Act coverage is materially weakened; where humans retain material discretion over allocation, governance, or asset disposition, securities-law obligations are more likely to apply.
For Securities Act purposes, the paper contends that many autonomous, overcollateralized lending vaults may fall outside both Howey and Reves because depositor returns are generated by code-governed market mechanics rather than managerial efforts, and because overcollateralization, automated liquidation, and on-chain transparency support treatment of lending positions as commercial loans rather than securities.
For the Investment Company Act and Investment Advisers Act, the paper argues that regulation should focus on whether investors have actually entrusted assets to a manager exercising ongoing discretion. It proposes that immutable or tightly bounded vaults may not fit traditional investment-company or adviser frameworks, while structures with active curation, discretionary allocation, custody-like control, or investment judgment over securities are more likely to trigger those regimes.
Custody, Public Offerings, Security Status, Tokenization
Recommends requiring issuers (or transfer agents) of tokenized securities to disclose and maintain official token contract addresses by blockchain network in SEC filings, including retired addresses, so investors and intermediaries can verify whether a tokenized asset is authentic and detect counterfeit versions.
Recommends enhancing investor verification tools by linking registered firms offering crypto or tokenized products to their official domains and creating plain-language guidance on how investors can verify crypto platforms, registration status, token addresses, and report impersonation scams.
Recommends investor-protection measures focused on disclosure and fraud prevention, including a standardized "key facts" disclosure format, language-access requirements, investor testing of disclosures, and coordinated anti-impersonation initiatives across regulators.
The submission argues that the SEC should expressly clarify whether the proposed definition of “crypto asset” includes assets recorded on permissioned and private distributed ledgers, because the current definition is unqualified and institutional tokenization models commonly use permissioned infrastructures.
The submission identifies a potential regulatory inconsistency: the proposed crypto asset definition is agnostic as to ledger permissioning, while the SEC’s September 2026 exemptive order requires certain trading venue smart contracts to be deployed on a public, permissionless distributed ledger, effectively making ledger architecture determinative for access to the relief.
The submission requests that the SEC clarify whether the public, permissionless ledger requirement is intended to be merely a transparency condition for participating venues or a substantive eligibility criterion that defines which tokenization infrastructures may use the regime, because the two interpretations produce materially different regulatory outcomes.
Action Committee for Crypto Clarity within the United States (ACFCC)
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
Urges the SEC to codify in the final rule that, once a crypto system is functional, ongoing services to maintain, secure, or enhance the system do not constitute “essential managerial efforts,” including when those services are performed by an independent service provider rather than the issuer.
Requests a bright-line exclusion for independent ministerial administrators that perform limited functions (such as KYC/AML onboarding and payment routing) without discretion over token economics, governance, treasury assets, or protocol parameters, so they are not treated as issuers, promoters, or providers of essential managerial efforts.
Seeks clarification that automated buyback-and-burn mechanisms funded by third-party commercial payments and executed through immutable smart contracts do not defeat the safe harbor, do not create rights to income or profits, and should not cause the associated token to be treated as a security; also requests coordination with the CFTC to confirm post-safe-harbor treatment of qualifying crypto assets as commodities.
Supports mandatory, standardized disclosure obligations for crypto issuers comparable to SEC public company reporting, including financial condition, ownership/control, token supply, financing arrangements, insider transactions, and material developments.
Recommends a centralized public reporting framework similar to EDGAR requiring initial offering disclosures, periodic reports, material event reporting, beneficial ownership disclosures, historical filing access, and machine-readable public data.
Advocates ongoing reporting obligations and investor-protection principles comparable in purpose to Forms 10-K, 10-Q, and 8-K, including timely disclosure of material changes and maintaining disclosure requirements even where regulatory exemptions apply.
Public Offerings, Security Status, Tokenization, Trading
Mandating full disclosure in securities regulation restores some, but not all, lost gains from trade caused by asymmetric information and moral hazard, improving social welfare but not fully eliminating inefficiencies.
In secondary markets, the expected buyer overpayment due to asymmetric information is tightly bounded by the product of the buyer’s prior variance and the valuation gap, providing a measurable standard for investor protection under regulation.
The CLARITY Act proposes exempting digital assets associated with mature blockchain systems from traditional disclosure requirements, justified by the model’s finding that buyer overpayment is minimal when buyers are well informed or when uncertain information has little effect on asset value.
Dmytro Lyushenko, NOTA Digital Currencies Research Center Inc.
Regulated custodians and intermediaries should establish procedures that distinguish between legal authority (e.g., executor, trustee, beneficiary) and technical control (e.g., possession of private keys or credentials), ensuring that lawful successors can access assets even if they lack technical credentials, and preventing unauthorized transfers by those with technical access but no legal entitlement.
The SEC should consider requiring regulated entities to maintain documented, auditable procedures for verifying succession claims, including claimant identity, legal authority, and technical execution, with temporary protective measures during verification and clear records of transfer-of-control events.
Succession procedures must address cross-border legal documents and ensure that technical transfers of tokenized assets are synchronized with legally recognized ownership records, especially for tokenized securities and real-world assets, to avoid gaps between operational and legal ownership.
Public Offerings, RFI Responses, Security Status, Tokenization, Trading
Attribute-based verification for investor eligibility should ensure the determination is made at the relevant time (e.g., at sale or access), reflecting the current status of credentials, including expiry and revocation, consistent with Rule 501(a) and Rule 506(c).
Where the SEC accepts attribute-based verification, only the decision (not underlying personal data) should be returned, supporting minimal disclosure and privacy, except where identification is explicitly required by regulation.
Retained records must be verifiable and secure for their required retention period, with digital signatures and public keys published on a public ledger, and signature algorithms chosen to remain trustworthy throughout the record’s life.
Tokenized registered-fund shares do not require, and should not receive, Automated Market Maker or venue registration relief, as their structure differs fundamentally from tokenized NMS equities; liquidity is provided by the fund itself, not through secondary trading venues.
Holder-rights parity for tokenized securities depends on an authoritative, regulated register maintained by a registered transfer agent, not on venue-level relief; this ensures correct execution of dividends, voting, and other corporate actions.
The Commission should require that any tokenized security traded on a Tokenized Securities Venue be subject to authoritative recordkeeping equivalent to a registered transfer agent, making holder-rights parity enforceable in practice.
