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
Brian K. McGrail

Letter to the Crypto Task Force 		Crypto ETPs, Crypto Lending, Custody, Public Offerings, Regulatory Sandbox, Safe Harbor, Security Status, Tokenization, Trading
  • Switzerland's DLT Act introduced a legal basis for ledger-based securities and a regulatory license category for DLT trading facilities.
  • Singapore's Payment Services Act (PSA) 2019 brings cryptocurrencies under AML and CFT regulations, ensuring consumer protection while promoting innovation.
  • Japan's Payment Services Act (PSA) and Financial Instruments and Exchange Act (FIEA) recognize Bitcoin as a legal payment method and regulate crypto assets as financial instruments.
Shan Parsan

Policy for the Crypto Task Force: Fraud Prevention and Tracing Framework 		Crypto ETPs, Crypto Lending, Custody, Public Offerings, Regulatory Sandbox, Safe Harbor, Security Status, Tokenization, Trading
  • Mandatory KYC/AML compliance for all cryptocurrency exchanges.
  • Enforcement of the Financial Action Task Force (FATF) Travel Rule.
  • SEC registration requirement for all crypto exchanges operating in the U.S.
Joon Kim, JK Advisory LLC

Re: Cryptocurrency Task Force 		Crypto Lending, Custody, Safe Harbor, Security Status, Trading
  • The SEC should recognize decentralization as a spectrum and provide better guidance on what constitutes a "decentralized and functional" network.
  • Projects under the Grace Period should be allowed to engage in certain permitted activities to incentivize their return to the U.S.
  • Uniform disclosure standards should be established for crypto projects to protect investors.
Alan Konevsky, tZERO Group, Inc.

Re: SEC Crypto 2.0: Formation of New Crypto Task Force 		Crypto Lending, Custody, Safe Harbor, Security Status, Trading
  • The document emphasizes the need for a clear regulatory framework for digital assets to ensure the United States remains a global leader in the digital evolution, particularly in financial markets.
  • It advocates for updates to the Special Purpose Broker-Dealer (SPBD) Statement to allow SPBDs to custody non-security crypto assets and engage in non-custodial activities.
  • The document calls for a clear path for issuers to cure historical securities law violations for digital assets that were not issued in compliance with securities laws.
J.W. Verret, GMU Scalia Law School

Letter to the Crypto Task Force 		Regulatory Sandbox, RFI Responses, Safe Harbor, Security Status, Tokenization, Trading
  • The document proposes a Memorandum of Understanding (MOU) between the SEC and CFTC to facilitate developer choice among various exemptions and pathways, promoting financial privacy, immutability, and decentralization.
  • It suggests the issuance of nine exemptive releases or rule proposals within one year, targeting specific patterns of public blockchain development and disbursal, rather than classifying tokens themselves.
  • The document advocates for the use of regulatory agreements or "contracts" as a flexible sandbox mechanism, providing tailored compliance obligations and safe-harbor conditions for individual innovators.
William C. Hughes, Consensys Software Inc.

Re: Amendments Regarding the Definition of “Exchange” (Release No. 34-97309, File No. S7-02-22), RIN 3235–AM45 		RFI Responses, Safe Harbor, Security Status, Trading
  • The amendments exceed the SEC's statutory authority by expanding the definition of "exchange" beyond what the statutory definition permits.
  • The amendments are arbitrary and capricious under the Administrative Procedure Act (APA) because they improperly expand the applicability of broker-dealer regulations rather than exchange regulations.
  • The required cost-benefit analysis is facially insufficient to withstand scrutiny, as the amendments fail to show that their benefits outweigh their costs.
Lennart Arte, Blockchain Research Lab

Uncertain Regulations, Definite Impacts: The Impact of the U.S. Securities and Exchange Commission’s Regulatory Interventions on Crypto Assets 		Regulatory Sandbox, Safe Harbor, Security Status
  • The SEC's classification of most cryptocurrencies, except Bitcoin, as securities has led to significant adverse market reactions, with returns dropping 12% over one week post-announcement.
  • The lack of clear regulatory guidelines from the SEC has created an unpredictable and volatile environment for market participants, increasing systemic risk and regulatory arbitrage.
  • The SEC's actions, influenced by traditional financial industry interests, may stifle innovation and push entrepreneurs to more crypto-friendly jurisdictions.