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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.
Custody, Public Offerings, Security Status, Tokenization, Trading
Tokenized securities offered to retail investors must be backed 1:1 by the actual underlying security, held by a regulated custodian, and subject to regular independent audits.
Clear, plain-language disclosure is required to explain exactly what the investor owns and what rights are attached; token holders must receive the same economic rights as ordinary shareholders, including dividends and distributions.
Custody, redemption, bankruptcy, and investor-recovery rules must be established before retail trading is allowed, and platforms must be subject to strong market-surveillance, anti-manipulation, cybersecurity, and conflict-of-interest rules.
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.
Ripple requests amendments or interpretive guidance under Rules 15c3‑1 and 15c3‑3 to allow Qualified Payment Stablecoins to be treated as allowable assets, cash equivalents, and eligible reserve assets, ensuring consistent treatment of stablecoins in collateral, custody, and reserve contexts.
Ripple urges the SEC to clarify that digital asset non‑securities beyond BTC and ETH may be deemed “readily marketable” when supported by exchange‑listed or competitively quoted ETPs, aligning FAQ Question 4 with broader digital commodity guidance.
Ripple recommends designating an on‑chain registry—maintained by a regulated digital transfer agent—as the authoritative legal register for directly issued tokenized securities, resolving dual‑registry ownership ambiguities under stress.
Tokenized equities risk blurring distinctions between economic exposure, liquidity access, and actual ownership/governance rights, raising potential gaps in investor protection and market‑structure integrity.
The introduction of synthetic or derivative-like tokenized representations may create divergent pricing, unclear claims, and fragmented liquidity unless regulatory standards clarify the precise rights each instrument provides.
The SEC may need a dedicated ownership‑integrity and evidence‑chain framework requiring plain‑language disclosures on rights, claims, governance, liquidity sources, and failure‑recovery mechanics for all tokenized equity instruments.
Innovation and investor protection in financial markets are complementary goals that can be achieved together through well-designed regulatory frameworks.
Tokenisation can improve post-trade processes such as reconciliation, collateral mobility, and automation, but its success depends on being implemented within established regulatory frameworks.
The history of modern equity markets shows that sustainable innovation flourishes when it strengthens trust and operates within clear and credible rules, rather than weakening governance in pursuit of speed or novelty.
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
The letter argues that the SEC’s attachment/separation framework for investment contracts applied to non‑security crypto assets is novel, lacks jurisprudential grounding, and cannot feasibly be implemented by third‑party interface providers because issuer‑side facts determining attachment are unknowable by those providers.
It requests a Commission‑level safe harbor exempting self‑custodial, user‑directed interfaces (e.g., MetaMask) from broker‑dealer registration when facilitating secondary transactions in non‑security crypto assets, even if an investment contract may have “attached” under the Release but not yet “separated.”
It contends that without such a safe harbor, U.S. interface providers face unworkable compliance obligations that will constrain token interoperability, distort competition relative to offshore providers, and reduce user protection by pushing activity to unregulated venues.
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
The report establishes that routing payment‑stablecoin balances into 1940 Act–registered money market funds is legally outside §404’s prohibition, because NAV‑based MMF shares are securities, not deposit‑equivalents, and §404 governs only yield on payment stablecoins.
It proposes a threshold NAV pass‑through test—requiring user‑borne downside risk, NAV‑tracking pricing, and 1099‑DIV tax treatment—under which any failure creates an irrebuttable presumption of prohibited passive yield.
It provides a six‑factor, on‑chain‑auditable framework for agencies to distinguish bona fide user‑initiated activity from disguised yield, anchoring “routing” within expected rulemaking categories (transfers and market‑making) rather than creating new statutory exceptions.
The petition requests that the SEC establish a recognized regulatory category for “Persistent‑Enforcement Digital Asset Systems,” where conditions governing asset use are automatically and continuously enforced at the asset level, independent of intermediaries.
The proposed framework would allow the SEC to distinguish digital assets that do not rely on ongoing managerial efforts (due to embedded, self‑executing enforcement) from those that do—directly affecting the Howey securities analysis.
The petition asserts that this structure would close material investor‑protection gaps, ensuring that conditions disclosed at issuance remain enforceable throughout the asset’s lifecycle, including across platforms and autonomous/AI‑driven transactions.
TEFRA’s bearer‑bond rules functionally prohibit tokenized bond issuance on public blockchains by denying issuers interest deductions and imposing excise taxes, creating a statutory barrier that Congress must amend to recognize compliant distributed‑ledger‑based bond registers.
Integration of tokenized securities into federal securities laws requires statutory or regulatory modernization—particularly expanding “broker” definitions, creating tailored DeFi‑broker/ATS frameworks, updating custody and transfer‑agent rules, and enabling onchain IPOs without fragmenting NMS market structure.
A BSA‑aligned compliance regime for tokenized securities—modeled on the GENIUS Act's token‑level monitoring and freeze‑and‑seize capabilities—is necessary to support pseudonymous, non‑custodial secondary trading while preserving investor protection and regulatory oversight.
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.
