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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.
Regulatory clarity alone is insufficient; institutions must continually verify that operational conditions (such as custody, asset backing, segregation, trading integrity, and cybersecurity) are supported by current evidence, especially after material changes.
Revalidation is essential: When material facts change (e.g., changes in custodians, reserves, platform architecture, liquidity, cybersecurity, or token structure), institutions must reassess whether prior conclusions remain valid based on updated evidence.
An implementation-verification layer should be integrated into digital-asset frameworks to identify material representations, supporting evidence, dependencies, downside ownership, conditions requiring renewed verification, and decision points for revalidation—complementing, not replacing, legal classification and regulatory controls
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 proposed framework defines “vaults” as smart-contract-based structures that pool digital assets, allocate them to yield-generating strategies, and allow participants to audit and receive proportional returns; legal analysis should focus on the conduct of humans involved, not the vault software itself.
Vaults may hold mixed asset types (digital securities, commodities, and other assets), requiring coordinated SEC and CFTC oversight; curators or advisors of mixed-asset vaults cannot be regulated coherently by either agency acting alone.
The framework proposes three regulatory tiers based on managerial discretion: Type I (Use) for off-the-shelf software, Type II (Follow) for predetermined strategies with mandatory co-investment, and Type III (Advised) for actively managed vaults, with joint SEC/CFTC oversight recommended for mixed-asset vaults.
The SEC’s transfer agent proposal allows blockchain-based master securityholder files, but does not address the need for a verifiable, dated, sourced issuance record that documents the facts about the issuer and asset—these facts are often missing or scattered, causing tokenized offerings to stall.
A robust issuance record should: (1) link every material fact to its source document, (2) timestamp each fact, (3) distinguish the type of evidence (issuer assertion, third-party review, authority issuance), and (4) preserve all versions without overwriting prior states.
The proposal’s requirements for exclusive control do not necessarily exclude public blockchains; transfer agents can maintain authority via smart contracts, and reconciliation between onchain and offchain records should be documented and explained, not prohibited.
Crypto Lending, Custody, Public Offerings, Security Status, Tokenization, Trading
U.S. regulatory guidance and recent SEC/Nasdaq/DTCC actions confirm that a tokenized security remains the same legal instrument under securities law, with its rights, protections, and obligations intact, regardless of digital representation.
Institutional tokenization requires maintaining a consistent relationship among the underlying asset or right, authoritative records, financial instrument, and digital representation, ensuring that legal status, encumbrances, and settlement remain intelligible as the instrument moves through market infrastructure.
A token or message may transfer between systems, but unless legal and economic status is tracked and preserved, the underlying rights, encumbrances, and settlement status may diverge, leading to potential legal uncertainty and operational risk.
Public Offerings, Regulatory Sandbox, Safe Harbor, Security Status, Tokenization, Trading
The submission requests the SEC to publish practical, pre-launch guidance for early-stage digital asset projects, including a checklist of facts developers should disclose and evaluate before public issuance, such as functional status, transferability, governance concentration, redemption features, and planned use of proceeds.
It recommends clarifying that referencing independently verified real-world assets or data does not alone establish an investment contract; legal analysis should focus on whether purchasers receive enforceable financial claims, expect profits from others’ managerial efforts, or are promised liquidity, appreciation, or return.
The submission urges coordinated regulatory classifications across agencies (SEC, Treasury, FinCEN, CFTC, state regulators) to provide coherent guidance on securities, commodities, payments, money-transmission, sanctions, and stablecoin questions before product launch.
The primary scalability constraint in programmable finance is not transaction execution, but the continuous coordination of institutional legitimacy and governance across interoperable financial systems. This bottleneck is a legal infrastructure issue, as it determines whether financial actions are authorized, enforceable, and institutionally valid.
Programmable Institutional Control architectures embed regulatory constraints, multi-signature mandates, and commercial law perimeters (e.g., UCC Article 12) directly into the control plane, enabling machine-verifiable compliance and transforming digital asset possession into legally protected property rights that survive insolvency and regulatory scrutiny.
Major collapses in digital asset markets (e.g., FTX, Celsius, Terra/Luna) are traced to governance failures—such as lack of segregation, legal clarity, and enforceable control—rather than settlement failures. Legal enforceability and operational legitimacy must be continuously synchronized to prevent systemic instability.
Custody, Public Offerings, Regulatory Sandbox, Security Status, Tokenization, Trading
Institutional authority and governance must remain verifiable and portable across technologies, networks, and asset classes, ensuring that legal responsibilities, approvals, and compliance persist regardless of changes in providers or execution environments.
Jurisdictional requirements are composable: recognized authorities determine which laws apply and whether requirements are satisfied, enabling cross-border regulatory sovereignty without forcing all regimes into a single asset contract or platform.
Regulatory sandboxes and technology-neutral infrastructure allow jurisdictions to test and enforce institutional control paths, supporting safer custody, compliance, and market structures while maintaining explicit, traceable legal authority and evidence.
Crypto ETPs, Custody, Public Offerings, Security Status, Tokenization, Trading
Tokenized securities in the U.S. are subject to existing securities laws, with the SEC distinguishing between issuer-sponsored and third-party models; the legal architecture and master record are central to regulatory analysis.
Regulatory frameworks (SEC, CFTC, EU, UK) emphasize that digital representation does not alter the legal rights, custody, or accountability; the focus is on preserving economic substance, investor protection, and operational resilience.
Institutional tokenization is advancing through regulated production environments, with legal enforceability, custody, and authoritative records prioritized for collateral, settlement, and structured finance instruments.
