An official website of the United States government
Here’s how you know
Official websites use .gov
A .gov website belongs to an official government organization in the United States.
Secure .gov websites use HTTPS
A lock
()
or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.
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.
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.
The SEC cannot extend broker‑dealer, exchange, or adviser jurisdiction to software developers merely because their published code facilitates transactions; publishing software is protected speech unless the developer assumes agency, custody, or client‑specific discretionary control.
Government attempts to require software to incorporate identity collection, monitoring, or intermediation functions constitute compelled speech and unconstitutional prior restraint, because they force creators to alter expressive software design to satisfy government‑preferred architectures.
Regulatory authority may constitutionally reach developers only when they move beyond publication and into professional conduct—such as holding unilateral power over user assets, executing transactions, or exercising ongoing discretionary judgment over users’ financial affairs.
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 comment argues that cryptographic non‑custody (via 2PC‑MPC) creates a legally distinct category under securities law because it makes unilateral asset control mathematically impossible, materially strengthening the non-broker and non-custodial analysis.
It asserts that smart-contract‑bound compliance—which prevents non‑compliant transactions at the signing layer—should be recognized as equivalent to, or stronger than, organizational controls, supporting outcome‑based rather than structure‑based regulation.
It maintains that Threshold‑FHE enables compliant market transparency by allowing targeted regulatory disclosure and aggregate reporting without exposing individual transaction data, satisfying regulatory objectives while preserving execution privacy.
The Safe Harbor Proposal establishes a rebuttable presumption of non–broker dealer status for strictly non custodial, non discretionary DeFi front end applications that do not solicit transactions and only interface with decentralized protocols.
The Proposal asserts that such apps do not create the agency risks (custody, discretionary execution, conflicts of interest, solicitation) that the Exchange Act’s broker dealer regime is designed to mitigate, thereby rendering full registration economically inefficient and legally misaligned.
The framework preserves SEC enforcement authority by allowing intervention when an app is DeFi In Name Only (DINO) and functions as a de facto centralized intermediary, ensuring investor protection principles remain intact.
The broker‑dealer’s use of Dinari’s blockchain system is permissible only if the off‑chain books and records remain the authoritative records fully compliant with Exchange Act Rules 17a‑3 and 17a‑4, with on‑chain tokens serving strictly as secondary, non‑economic representations.
The blockchain‑based tokens must be entirely duplicative, non‑transferable, and without independent economic or governance rights to ensure they do not alter customer ownership rights or create a separate asset class.
Broker‑dealers must maintain policies and supervisory procedures ensuring continuous alignment between on‑chain and off‑chain records, including reconciliation and exception reporting to prevent false or misleading customer information.
The submission urges the SEC to distinguish legally between tokenization and canonicalization, arguing that only canonicalized, ledger-native asset objects allow the Commission to examine, audit, and enforce regulatory obligations at the protocol level.
It recommends that Regulation Crypto include architectural requirements for digital-asset securities, potentially through a class definition certification regime that embeds compliance logic in canonical class definitions rather than relying on issuer-by-issuer contract code.
It advises that safe harbors, custody rules, and settlement frameworks must account for ledger architecture, warning that permitting trading on smart contract systems lacking canonical asset identity leaves the SEC unable to enforce against assets the ledger cannot natively identify.
The submission proposes a Structural Enforcement Standard that embeds legally binding transfer conditions, remedies, revocability, and dispute resolution terms directly into a token’s architecture, ensuring obligations survive every transfer and eliminating reliance on platform-level enforcement.
The model applies traditional trust law architecture—separating authority (trustee) from beneficial rights (beneficiary)—to digital assets through a dual layer token structure that enables automatic, on chain enforcement consistent with established legal doctrine.
The author urges the SEC to grant regulatory clarity and potential safe harbor for tokens adopting this structure, arguing it provides superior investor protection, clearer legal classification, and a scalable foundation for institutional tokenization.
The letter urges the SEC to favor prospective rulemaking over individualized no‑action or exemptive relief, arguing that selective relief fragments the market, creates uneven treatment, and implicitly advantages entities able to petition for relief.
It recommends establishing a formal safe harbor via notice‑and‑comment to accommodate decentralized networks that cannot seek exemptive relief, enabling tokenization on both permissionless and permissioned systems with appropriate investor protections.
The letter argues that tokenized‑security recordkeeping and compliance functions can be embedded directly in blockchain systems, potentially reducing or eliminating mandated transfer agents and other intermediaries, provided issuers retain responsibility and optional delegation rights.
The document operationalizes the integration of tokenized U.S. sovereign bills and private credit into programmable infrastructure, establishing mandatory agent accountability envelopes, immutable decision logs, and standardized evidence artifacts to ensure regulatory alignment, eligibility enforcement, and market integrity without introducing new legal obligations or policy positions.
It mandates that all algorithmic agents operate under explicit, examiner-ready mandates with defined risk limits, kill authority, and change control, ensuring that all agentic actions are attributable to a responsible legal entity and are fully auditable for compliance with existing securities laws and supervisory expectations.
The framework requires dual-layer custody controls (on-ledger and off-ledger), continuous reconciliation, and robust asset return protocols, with multi-party approvals and evidence packaging, to prevent commingling, ensure 1:1 asset backing, and enable controlled unwind or asset return in stress or wind-down scenarios.
