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
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.
     
Deborah Djeu, Arca

RE: “That’s Our Two Satoshis” - Fixing Token Valuations: Arca Proposes Adjusted Market Cap Standard 		Security Status, Tokenization, Trading
  • Arca proposes an adjusted market cap standard to address the incorrect calculation of market cap by other services.
  • The document emphasizes the need for a more effective methodology to account for the number of tokens actually issued, outstanding, and held back by the Treasury.
  • Arca introduces the term "Adjusted Market Cap" to provide a more accurate representation of a token's market value, considering factors like issued tokens, locked tokens, and tokens held by private investors.
David E. Rutter, R3

Letter to the Crypto Task Force 		Regulatory Sandbox, Security Status, Tokenization, Trading
  • R3 supports the SEC's regulatory clarity and pro-innovation mindset, emphasizing the importance of regulatory clarity for crypto assets to build institutional confidence.
  • R3 advocates for the establishment of a regulatory sandbox for digital assets, highlighting its value in facilitating innovation and providing a controlled environment for regulatory observation.
  • R3 underscores the significance of international cooperation in regulating crypto markets to ensure investor protection, market integrity, and systemic risk oversight.
SIFMA

Re: Requests for Exemptive Relief from the Federal Securities Laws for Tokenized Equities and Other Digital Assets 		RFI Responses, Security Status, Tokenization, Trading
  • SIFMA urges the SEC to reject requests for immediate no-action or exemptive relief for tokenized equities and other digital assets, advocating for a more substantive notice and comment process instead.
  • SIFMA emphasizes the importance of retaining investor protections provided under federal securities laws, particularly when considering new forms of technology and trading platforms.
  • SIFMA highlights the need for public debate on policy questions related to the trading of tokenized NMS securities, including the application of Regulation NMS and the potential impact on market transparency and liquidity.
Jonathan Schmalfeld, Daniel McAvoy, and Stephen Rutenberg, Polsinelli PC

Re: Scoping Out 		RFI Responses, Safe Harbor, Security Status, Tokenization
  • The letter urges the SEC to clarify that tokenizing or creating a cryptographically authenticated digital representation of an asset does not convert a non-securities transaction into a securities transaction.
  • TDC recommends that the SEC issue formal guidance and commence rulemaking to exempt bona fide consumer sales of goods and services (including NFTs) from securities laws where no profit or equity interest is offered and there is no contractual obligation for repayment.
  • TDC suggests that the SEC provide formal guidance on the application of securities laws to stablecoins and wrapped tokens, ensuring that these digital assets are not unnecessarily classified as securities or investment contracts.
Kecheng Lai, Knowpia Inc.

RE: Recommendation Letter - Legal Pathway for End User Distribution Tokens Prior to Rulemaking under the CLARITY Act 		Safe Harbor, Security Status, Tokenization, Trading
  • Establishment of a provisional EUD Token Certification process for self-certifying tokens under the CLARITY Act.
  • Implementation of a No-Action Letter mechanism to confirm SEC non-enforcement for compliant EUD token projects.
  • Recognition of EUD tokens as non-securities, allowing their use for payments, rewards, and on-platform utility.
     
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.
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.