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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, Safe Harbor, Security Status, Tokenization, Trading
The SEC should mandate DTCC cooperation to enable near real-time movement of registered ownership between direct and intermediated holding, creating a level playing field for tokenized securities.
Infrastructure reform is necessary to remove regulatory and market barriers to direct holding and self-custody, ensuring benefits equivalent to intermediated accounts for direct holders.
The SEC should request proposals for a reformed infrastructure and clarify broker-dealer authority to execute transfers of directly held securities for trading in traditional markets.
Stuart Alderoty, Sameer Dhond, and Deborah McCrimmon, Ripple
Public Offerings, Security Status, Tokenization, Trading
SEC authority should hinge on enforceable promises and legal claims, not mere expectations of profit or passive economic interest. Without privity or contractual rights, speculation does not create securities status.
Securities regulation should apply to primary distributions where privity exists (e.g., ICOs), not to perpetual secondary-market trades. Treating every issuer sale as a capital raise creates legal fictions and operational paralysis.
Regulatory focus should target cases where an issuer or affiliated group retains unilateral control over network rules or token functionality, as this may constitute an ongoing obligation. Control must be objectively defined; mere influence or inventory holdings do not qualify.
Securities Industry and Financial Markets Association (SIFMA)
Activities involving native, wrapped, or entitlement tokens qualify as securities transactions, triggering broker-dealer, exchange, and registration requirements under the Securities Act and Exchange Act.
Issuers of tokenized securities must comply with Securities Act §§ 5, 6, 7, 10, including filing registration statements and delivering prospectuses. Additional disclosures may be needed to address unique tokenization risks.
Sections 12, 13, 15, 17, and 23 of the Securities Act and §§ 9, 10, and 20 of the Exchange Act prohibit manipulative practices and impose liability for material misstatements or omissions, regardless of whether securities are tokenized.
Securities Industry and Financial Markets Association (SIFMA)
Custody, Public Offerings, Security Status, Tokenization, Trading
Across the SEC’s Investment Advisers Act, Investment Company Act, Securities Act, and Exchange Act rules, the legal and regulatory requirements generally apply equally to traditional and tokenized assets. The rules governing registration, disclosure, custody, recordkeeping, anti-fraud, and investor protection are not fundamentally altered by the use of tokenization or digital asset formats. Where tokenized assets are securities, they are subject to the same substantive regulatory regime as their non-tokenized counterparts.
For investment advisers and investment companies, custody rules (e.g., IAA Rule 206(4)-2, ICA Rules 17f-1 through 17f-7) require that client assets—including tokenized securities—be held with qualified custodians and subject to the same segregation, audit, and reporting requirements as traditional securities. Self-custody of tokenized assets by advisers is not subject to lesser requirements, and banks acting as custodians for tokenized assets must meet the same standards as for other securities.
The core disclosure, reporting, and anti-fraud provisions of the federal securities laws (including the Securities Act, Exchange Act, and related SEC rules) apply to offerings, trading, and custody of tokenized securities. This includes requirements for registration statements, prospectus delivery, periodic reporting, proxy rules, and prohibitions on manipulative or deceptive practices. The SEC’s authority and investor protections are not diminished by the use of tokenized or digital asset technology.
The proposed modernization advocates amending the Custody Rule to allow registered investment advisers (RIAs) to safeguard client crypto assets using non-qualified custodian (non-QC) solutions under a reasonableness standard, ensuring assets remain secure and fiduciary duties are met.
Introducing flexibility to permit both QC and non-QC safeguarding solutions mitigates operational frictions, reduces concentration risk, and aligns custody practices with the unique properties of crypto assets, while maintaining compliance with the Custody Rule’s core tenets.
The model framework leverages multi-signature/multi-party computation (MS/MPC) technology, contractual agreements (MPA), and operational security standards to satisfy policy objectives of segregation, safeguarding, and independent verification without mandatory third-party custody.
Securities Industry and Financial Markets Association (SIFMA)
Tokenized securities traded via DeFi or CeDeFi platforms must comply with U.S. securities laws, including the Exchange Act, regardless of claims of decentralization or minimal intermediary involvement.
A clear and nuanced taxonomy is essential to distinguish between natively issued digital securities, wrapped tokens, SBS, and non-security instruments, ensuring proper application of securities laws and investor protections.
Fragmentation between tokenized and traditional securities markets poses risks to market integrity, and regulators must ensure fungibility, consistent trade reporting, and integration with existing infrastructures like Reg NMS, CAT, and SIPC.
The SEC has jurisdiction over leveraged crypto ETFs and related securities products, and has previously blocked filings for extreme 5x leveraged ETFs to protect investors.
Leveraged crypto instruments offered to U.S. persons via unregistered platforms may fall under SEC oversight, especially when tied to assets potentially classified as securities.
Joint SEC-CFTC efforts in 2025 have initiated regulation of onshore perpetual contracts with leverage limits, but offshore platforms remain largely unregulated, posing risks to U.S. retail investors.
DeFi Education Fund, Andreessen Horowitz, The Digital Chamber, Orca Creative, J.W. Verret, and Uniswap Foundation
The letter argues that Citadel’s attempt to classify all entities and technologies involved in DeFi transactions as SEC-registered intermediaries is legally flawed, as autonomous software and developers without custody or control over user assets do not meet the statutory definitions of “broker” or “dealer.”
The signatories assert that expanding the definitions of “exchange” and “broker-dealer” to include DeFi protocols exceeds the SEC’s statutory authority and risks misclassifying non-intermediary software infrastructure, undermining innovation and regulatory clarity.
The letter supports notice-and-comment rulemaking for tokenized equities but urges the SEC to adopt frameworks—such as safe harbors—that distinguish between centralized and decentralized systems, ensuring that only entities posing traditional risks are subject to registration.
GUARDD urges the SEC to use its exemptive authority under Section 36 of the Exchange Act to formally recognize "Qualified Disclosure Publishers" (QDPs), enabling compliant secondary trading of exempt and tokenized securities without requiring full Exchange Act reporting.
The proposal includes a request for federal preemption of inconsistent state Manual Exemption provisions, aiming to streamline secondary trading across jurisdictions while preserving states’ anti-fraud enforcement powers.
GUARDD recommends that QDPs be required to publish token-specific data (e.g., contract address, blockchain network, transfer restrictions, audit status) alongside Rule 15c2-11(b) disclosures to support on-chain secondary trading on regulated venues.
The document proposes IP Bonds and IP CDOs as structured financial instruments backed by intellectual property, enabling their use as collateral in debt markets and aligning with international financial standards such as IAS 38/IFRS.
It calls for formal recognition of IP Bonds within existing financial frameworks (e.g., ISDA, ICMA, SIFMA), including their eligibility for repo markets, post-trade transparency, and ESG classification under ICMA principles.
The Eurasian Standard of IP Valuation is positioned as a global benchmark, with requests for WIPO endorsement, interagency working groups, and amendments to IFRS to support on-chain IP valuation and prevent regulatory fragmentation.
