Crypto Task Force Written Input

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.

Date Written Input Topic(s) Key Points
Lawrence J. Trautman, Prairie View A&M University

Crypto Regulation in the Time of Trump 		Crypto ETPs, Custody, Public Offerings, Security Status, Tokenization, Trading
  • This paper, "Crypto Regulation in the Time of Trump", examines the regulatory environment for cryptocurrencies in the United States, particularly in the context of the Trump administration's policies and actions.
  • The paper seeks to analyze the impact of the Trump administration's deregulatory approach on the crypto industry, including the potential risks and benefits of reduced oversight and the role of key regulatory bodies such as the SEC.
  • The paper aims to provide a comprehensive understanding of the current state of crypto regulation in the US, highlighting key issues such as the classification of cryptocurrencies as securities, the role of regulatory sandboxes, and the need for clear guidance on tokenization and trading, with the goal of informing policymakers and regulators as they navigate the complex and rapidly evolving landscape of crypto regulation.
Mohamed ElBendary

The Normative Theory of Web3 Commercial Integrity 		Custody, Public Offerings, Security Status, Tokenization, Trading
  • The paper introduces a normative theory centered on five interdependent principles: enforcement, trust, duty segregation, governance, and adaptability, which are collectively necessary to uphold investor protection, maintain efficient and orderly markets, and ensure transparent capital formation.
  • It emphasizes the importance of atomic on-chain rule enforcement, where all compliance rules are enforced within each transaction context to prevent execution-path-dependent violations and regulatory arbitrage.
  • The paper highlights the need for on-chain segregation of duties, ensuring that roles such as protocol developers, auditors, and compliance functions have distinct, verifiable identities to prevent governance failures and maintain system-wide accountability.
Daniel Bruno, Corvelo Costa

Strategic Technical Report 		Custody, Regulatory Sandbox, Security Status, Tokenization, Trading
  • Immediate reinforcement of KYC/AML and real-time monitoring for exchanges, DEX, and DeFi protocols.
  • Prohibition of operation for platforms that do not implement minimum verification protocols.
  • Formation of a task force integrating SEC, Chainalysis, and blockchain forensic experts for immediate asset freezing linked to suspicious addresses.
Dylan Lowe, Davis Wright Tremaine LLP

RE: Comment on Regulatory Framework for Digital Assets and Tokenized Securities 		Custody, Regulatory Sandbox, Safe Harbor, Security Status, Tokenization

  • The letter requests the SEC to issue interpretive guidance or no-action letters for tokenized insurance-backed bonds to provide legal clarity and support innovation.
  • It proposes the creation of a regulatory sandbox or pilot program for developing and testing tokenized insurance products in a controlled environment.
  • The letter recommends updating the SEC's "Framework for 'Investment Contract' Analysis of Digital Assets" to explicitly address tokenized real-world assets like insurance products.
     
Roberto Braceras, Fidelity Investments

Re: Request for Information on There Must Be Some Way Out of Here 		Crypto Lending, Custody, RFI Responses, Safe Harbor, Trading
  • Fidelity supports the withdrawal of the Joint Staff Statement on Broker-Dealer Custody of Digital Asset Securities and recommends identifying best practices for broker-dealers that custody digital assets.
  • Fidelity urges the SEC to clarify that a broker-dealer may offer its customers a fully-paid lending program for digital assets.
  • Fidelity recommends establishing a safe harbor to support secondary trading of digital assets that are not investment contracts.
Blockchain Association

Written Input Regarding Investment Adviser Custody-Related Topics 		Custody, RFI Responses, Security Status, Tokenization, Trading
  • The Blockchain Association (BA) recommends that the SEC amend the RIA Custody Rule to allow registered investment advisers (RIAs) to choose between self-custody and third-party custody of crypto assets, subject to appropriate safeguards.
  • BA suggests expanding the definition of "qualified custodians" to include state-registered trust companies, state banks, and other appropriately registered crypto asset-native custodians.
  • BA advocates for a principles-based approach to crypto asset custody, allowing RIAs to leverage technological advances and adopt tailored safeguards for client assets based on specific custody practices and circumstances.
The Digital Chamber

Re: Crypto Custody under the Investment Company Act of 1940 		Crypto ETPs, Custody, RFI Responses, Security Status, Trading
  • The Commission should provide guidance that state-chartered trust companies and similar institutions qualify as "banks" for purposes of Section 17(f) of the Investment Company Act of 1940.
  • The definition of "custody" under the 1940 Act with respect to crypto assets should mean possession of the private keys associated with such assets.
  • The Commission should propose a custody rule specifically tailored to the unique characteristics of crypto assets, including the use of multi-signature wallets and cold storage solutions.
     
Rita Mitchell, Georgia Society of CPAs

Letter to the Crypto Task Force 		Custody, Regulatory Sandbox, Security Status, Trading
  • Lack of transparency and adequate disclosure requirements for transactions triggering "security concerns".
  • Need for clear regulatory guidelines on investor recourse and exchange's right to freeze accounts.
  • Specific disclosure and communication requirements for locking investor accounts, including reasons, steps, and timeline for resolution.
Matthew B. Comstock, Willkie Farr & Gallagher LLP

RE: Special Purpose Broker-Dealers and Financial Responsibility Matters 		Custody, RFI Responses, Safe Harbor, Security Status, Trading
  • The Digital Chamber (TDC) requests the SEC to issue permanent guidance and amend existing rules to clarify how Special Purpose Broker-Dealers (SPBDs) and other broker-dealers may custody crypto asset securities and non-security crypto assets.
  • TDC advocates for a technology-neutral, principles-based approach to broker-dealer custody of crypto asset securities, ensuring exclusive control over such assets through various methods, including key sharding and multi-signature wallets.
  • TDC requests the SEC to confirm that all broker-dealers, including SPBDs, may custody non-security crypto assets and facilitate trading in both crypto asset securities and traditionally represented securities.
CoinShares International Limited

RE: It’s Time to Modernize the RIC Tax Rules 		Crypto ETPs, Crypto Lending, Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
  • Ease the asset diversification requirements in Subchapter M to allow more flexibility for funds.
  • Expand the types and amounts of income that funds can receive without losing regulated investment company (RIC) status.
  • Modify the RIC excise tax distribution requirements to reduce compliance costs impacting investment returns.