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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.
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.
Regulation of crypto asset trading platforms (CTPs) should be modeled on the alternative trading systems (ATS) regime, but tailored for crypto markets, allowing for innovation and retail participation while maintaining investor protections.
CTPs should be permitted to notice-register with the SEC and trade both security/non-security pairs and purely non-security pairs, preventing market fragmentation and supporting efficient, consolidated markets.
Public disclosure requirements (Form ATS-N) should apply to CTPs trading NMS stocks only above a volume threshold; below this threshold, disclosures should be confidential, protecting proprietary information and encouraging innovation.
Andreessen Horowitz (a16z) and DeFi Education Fund (DEF)
The letter proposes a safe harbor from SEC exchange registration requirements for decentralized exchange protocols (DEXs) and DEX Apps, arguing that systems which do not function as traditional exchanges and do not present intermediary-related risks should not be subject to registration under the Securities Exchange Act of 1934.
The safe harbor criteria require DEXs and DEX Apps to be non-custodial, automated, permissionless, and credibly neutral, ensuring users retain control and eliminating centralized operator risks that exchange regulation is designed to address.
The proposal aligns with pending legislation (such as the CLARITY Act) and recent SEC staff guidance, emphasizing that neutral software tools enabling self-directed activity do not trigger exchange registration obligations, thereby supporting regulatory clarity and innovation.
The response advocates for a technology-neutral regulatory framework, emphasizing that rules should focus on regulatory outcomes (such as investor protection and market integrity) rather than prescribing specific technological means, and that principles-based standards are preferable to prescriptive requirements.
tZERO recommends rescinding the SEC’s “Three-Step Process” for ATS settlement of digital asset security trades, arguing that recent regulatory guidance now permits broker-dealers to custody crypto asset securities directly, making the previous workaround obsolete and unnecessarily restrictive.
The document proposes targeted amendments to existing forms (Form ATS and Form ATS-N) to clarify disclosure requirements for crypto asset security ATSs, rather than creating new forms, and suggests that public blockchain records should satisfy regulatory reporting and recordkeeping obligations, reducing duplicative compliance burdens.
Conduct‑level adherence is identified as a distinct and currently missing compliance layer necessary for autonomous, on‑chain financial activity, ensuring that an actor’s entire sequence of actions complies with its governing mandate.
The submission recommends the SEC recognize independent verifiability as separate from enforcement, requiring compliance demonstrations to be technology‑neutral, tamper‑evident, continuous, and privacy‑preserving.
It proposes that regulated firms be permitted to satisfy demonstration obligations through cryptographic, zero‑knowledge proofs that show mandate adherence without disclosing strategies, positions, or transaction‑level detail.
The Coalition supports the SEC Staff’s clarification that non‑custodial user interfaces that merely convert user‑initiated instructions into blockchain‑legible commands do not constitute broker‑dealer activity, as they neither intermediate transactions nor take possession of customer assets.
The Coalition urges the SEC to undertake formal notice‑and‑comment rulemaking to establish a durable, principles‑based definition of “broker” aligned with evolving blockchain technologies, thereby preventing future expansive interpretations that could chill innovation.
The Coalition recommends extending regulatory clarity beyond user interfaces to other neutral infrastructure providers (e.g., validators, RPC/API providers, oracles, cloud services) to ensure they are not inappropriately categorized as broker‑dealers despite not performing brokerage functions.
Facility status for a crypto ATS should apply only when the ATS functionally substitutes for, or extends, an exchange’s core market operations, not when the ATS merely shares enterprise infrastructure or ownership.
NMS plans and Form ATS requirements should be modernized—rather than replaced—to address 24/7 trading, crypto-specific reference data, and on‑chain settlement, maintaining regulatory equivalence between traditional and crypto markets.
Crypto ATS oversight should continue using the confidential, non‑approval Form ATS framework, complemented by targeted public disclosures and potential on‑chain alternatives to Form ATS‑R where transparency is inherently superior.
The Digital Chamber (TDC) urges the SEC to modernize Regulation ATS Rule 302, noting that certain record keeping requirements (including time sequenced order records and USD denominated trading summaries) may be impracticable or distortive for on chain matching engines and trading pairs that do not involve U.S. dollar valuation.
TDC recommends that the SEC evaluate whether on chain settlement flows risk exposing confidential subscriber trading information, and consider permitting or encouraging measures that allow ATS subscribers to mask wallet level activity to protect trading strategies.
TDC advises the SEC to reassess the application of Rule 15c3 5 to crypto ATSs, clarifying that traditional pre trade risk controls may be unnecessary or duplicative where atomic settlement inherently prevents certain risks (e.g., duplicative trades) while still requiring controls to address order entry errors and appropriately calibrated credit limits.
The Commission should issue Commission‑level guidance—rather than rely on staff FAQs—to clarify how ATSs trading crypto asset securities can meet existing disclosure, order display, execution access, custody, reporting, and SCI obligations without revealing exploitable technical details, while maintaining comparability across venues.
Applying existing ATS and NMS frameworks to tokenized NMS stocks requires targeted clarification on USD‑conversion governance, staleness controls, equivalent access, integration into consolidated market data, and functional boundaries between brokerage activity, clearing agency activity, and DLT‑based settlement.
Regulation SCI should continue to apply based on technology‑neutral principles, focusing on systems the ATS operates or controls, while providing guidance on how DLT components, external blockchain dependencies, and validator‑control scenarios affect SCI scope, incident monitoring, and resilience expectations.
