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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.
The letter argues that existing exchange and ATS regulations cannot be automatically applied to disintermediated protocols because these systems lack core intermediary functions such as custody, order‑book operation, discretion, or agency on behalf of users.
It urges the Commission to distinguish between true intermediaries and neutral software or protocol developers, emphasizing that misclassification would impose technologically impossible obligations and effectively prohibit DeFi activity in the U.S.
The submission advocates for a function‑based, technology‑neutral regulatory framework—mirroring the Commission’s historic approach to emerging technologies—that maintains investor protection without forcing decentralized systems into legacy market‑structure models.
The letter urges the SEC to adopt a functional test for “facility” under the Exchange Act so that only technologies actually performing exchange functions fall within regulatory scope, thereby preventing overreach to DeFi software, AMMs, smart contracts, or developers.
It argues that “group of persons” should not be interpreted broadly; developers or entities lacking unified intent or control over exchange functions should not be regulated as an exchange merely because their software is used by one.
The letter maintains that DeFi technologies providing liquidity or autonomous functionality (e.g., AMMs, self-custodial tools) perform non‑exchange functions and therefore cannot be treated as exchange facilities or components of an exchange.
Custody, Public Offerings, Regulatory Sandbox, Security Status, Tokenization, Trading
Requiring issuer consent for third‑party tokenization would contradict longstanding federal securities law principles, including Section 4(a)(1), Rule 17Ad‑20, and decades of SEC precedent that prohibit issuer-imposed restrictions on secondary‑market portability.
Third‑party tokenization does not create a new security and preserves full shareholder rights; therefore, conditioning tokenization on issuer consent would improperly grant issuers veto authority over lawful secondary‑market transfers.
Recent SEC actions—such as Nasdaq’s tokenized trading approval and the DTCC Tokenization Services pilot—explicitly operated without issuer‑consent requirements, making any new consent mandate a reversal of established regulatory logic and potentially anticompetitive.
SIFMA (Securities Industry and Financial Markets Association)
AMM‑based trading of tokenized securities must be regulated based on function, not technology, ensuring that entities performing exchange, ATS, broker, or dealer roles—such as protocol deployers, governance bodies, significant liquidity providers, and front‑ends—are subject to corresponding federal securities law obligations.
AMMs introduce structural investor‑protection and market‑integrity risks (MEV/front‑running, slippage, oracle failures, pseudonymous trading, lack of surveillance, limited dispute resolution, liquidity fragmentation) that must be mitigated through mandatory controls, disclosures, AML/KYC application, and integration with existing market‑structure requirements.
To support compliant securities trading, AMM venues must incorporate price discovery, reporting, systems integrity, and operational resilience comparable to Regulation NMS and Regulation SCI, including reliable market data, transparent execution, and accountable entities capable of maintaining and upgrading smart‑contract trading systems
Digital‑asset documentation is often fragmented across exchanges, wallets, tax reports, platform statements, and user‑generated materials, creating evidentiary uncertainty in legal, fiduciary, and insurance contexts.
Because regulatory treatment may hinge on issuer representations, managerial efforts, and disclosures—not merely asset characteristics—the reliability and completeness of record sets materially affect legal determinations.
The absence of a neutral infrastructure for assessing completeness, consistency, and evidentiary sufficiency of digital‑asset records creates a procedural gap that impairs courts, fiduciaries, and counterparties in evaluating claims.
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.
Custody, Public Offerings, Security Status, Tokenization, Trading
The framework establishes cryptographically immutable log segments and standardized evidence packs for product provenance, prescription legitimacy, custody, and safety. This ensures that material risks—such as supply chain fraud, delayed recall disclosures, or compliance breaches—cannot be obscured or delayed by corporate officers, directly supporting SEC requirements for timely and accurate disclosure of material liabilities.
All evidence access is governed by a tiered model (Tier 0/1/2) with strict purpose limitation, time-to-live (TTL) constraints, and post-access review. No single party can override governance controls (“no-master-key” posture), and all corrections, supersessions, and revocations are non-destructive and fully auditable. This structure supports legal defensibility in audits, M&A due diligence, and regulatory investigations.
The framework explicitly links financially consequential actions (e.g., reimbursements, settlements, or claims) to underlying, cryptographically authenticated operational evidence. Payouts or settlements cannot proceed if evidence states (product authenticity, authorization, custody, safety) are unresolved, reducing exposure to accounting fraud and ensuring compliance with investor protection and market integrity standards
Custody, Public Offerings, RFI Responses, Security Status, Tokenization, Trading
The SEC should continue developing a clear regulatory framework enabling broker‑dealers to custody, trade, and support crypto asset securities, including on ATSs, to reduce legal uncertainty and enable compliant market participation.
The SEC should issue bright‑line standards for tokenized securities, ensuring ATSs can rely on the regulatory status ascribed to a tokenized instrument—critical for avoiding unintended securities‑based swap or unregistered offering violations.
The SEC should provide regulatory clarity permitting on‑chain recordkeeping and settlement by broker‑dealers without triggering clearing‑agency status, enabling lawful integration of distributed‑ledger processes into securities market infrastructure.
The document proposes a cryptographic, examiner-ready infrastructure for digital and synthetic media that enables verifiable provenance, consent, and royalty settlement. This framework is designed to mitigate intellectual property risks, ensure accurate revenue attribution, and support regulatory oversight without exposing confidential commercial details.
It establishes a tiered, auditable operational model for tracking authenticity, authorized use, derivation lineage, and rights-chain integrity. The model enforces rigorous evidence standards for media asset creation, transformation, and monetization, supporting dispute resolution and regulatory compliance while explicitly preserving the primacy of contractual and institutional review.
The framework introduces privacy-preserving, bounded verification mechanisms that allow regulators and examiners to confirm royalty streams, rights, and usage without full disclosure of trade secrets. It mandates immutable evidence packs, hold-only containment for unresolved disputes, and replayable audit trails to ensure that all determinations can be independently reconstructed and corrected as needed.
SIFMA (Securities Industry and Financial Markets Association)
SIFMA urges that Regulations ATS and NMS must continue to apply fully to tokenized securities and on chain trading platforms, cautioning against lowering standards for crypto ATSs or exempting new entrants from established investor protection obligations.
Consistent registration requirements (exchange, ATS, broker dealer) are deemed essential for any on chain trading venue, as integration into SIPs/TRFs and market wide surveillance is impossible without formal regulatory status.
Price discovery, transparency, and post trade reporting must remain intact, including harmonized volatility controls and prevention of market fragmentation across tokenized, wrapped, and traditional securities trading environments.
