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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.
AMM‑based trading of tokenized securities must be regulated based on function, not technology, ensuring that entities performing exchange, ATS, broker, or dealer roles—such as protocol deployers, governance bodies, significant liquidity providers, and front‑ends—are subject to corresponding federal securities law obligations.
AMMs introduce structural investor‑protection and market‑integrity risks (MEV/front‑running, slippage, oracle failures, pseudonymous trading, lack of surveillance, limited dispute resolution, liquidity fragmentation) that must be mitigated through mandatory controls, disclosures, AML/KYC application, and integration with existing market‑structure requirements.
To support compliant securities trading, AMM venues must incorporate price discovery, reporting, systems integrity, and operational resilience comparable to Regulation NMS and Regulation SCI, including reliable market data, transparent execution, and accountable entities capable of maintaining and upgrading smart‑contract trading systems
Digital‑asset documentation is often fragmented across exchanges, wallets, tax reports, platform statements, and user‑generated materials, creating evidentiary uncertainty in legal, fiduciary, and insurance contexts.
Because regulatory treatment may hinge on issuer representations, managerial efforts, and disclosures—not merely asset characteristics—the reliability and completeness of record sets materially affect legal determinations.
The absence of a neutral infrastructure for assessing completeness, consistency, and evidentiary sufficiency of digital‑asset records creates a procedural gap that impairs courts, fiduciaries, and counterparties in evaluating claims.
Custody, Public Offerings, RFI Responses, Security Status, Tokenization, Trading
The SEC should continue developing a clear regulatory framework enabling broker‑dealers to custody, trade, and support crypto asset securities, including on ATSs, to reduce legal uncertainty and enable compliant market participation.
The SEC should issue bright‑line standards for tokenized securities, ensuring ATSs can rely on the regulatory status ascribed to a tokenized instrument—critical for avoiding unintended securities‑based swap or unregistered offering violations.
The SEC should provide regulatory clarity permitting on‑chain recordkeeping and settlement by broker‑dealers without triggering clearing‑agency status, enabling lawful integration of distributed‑ledger processes into securities market infrastructure.
SIFMA (Securities Industry and Financial Markets Association)
SIFMA urges that Regulations ATS and NMS must continue to apply fully to tokenized securities and on chain trading platforms, cautioning against lowering standards for crypto ATSs or exempting new entrants from established investor protection obligations.
Consistent registration requirements (exchange, ATS, broker dealer) are deemed essential for any on chain trading venue, as integration into SIPs/TRFs and market wide surveillance is impossible without formal regulatory status.
Price discovery, transparency, and post trade reporting must remain intact, including harmonized volatility controls and prevention of market fragmentation across tokenized, wrapped, and traditional securities trading environments.
The submission proposes a Structural Enforcement Standard that embeds legally binding transfer conditions, remedies, revocability, and dispute resolution terms directly into a token’s architecture, ensuring obligations survive every transfer and eliminating reliance on platform-level enforcement.
The model applies traditional trust law architecture—separating authority (trustee) from beneficial rights (beneficiary)—to digital assets through a dual layer token structure that enables automatic, on chain enforcement consistent with established legal doctrine.
The author urges the SEC to grant regulatory clarity and potential safe harbor for tokens adopting this structure, arguing it provides superior investor protection, clearer legal classification, and a scalable foundation for institutional tokenization.
Replace Rule 603’s prescriptive SIP-based consolidated display requirement with a principles-based “Fair Quote Presentation Rule” that focuses on anti-misleading standards, disclosure of data sources, and transparency rather than mandating a single data model.
Explicitly allow alternative, verifiable data sources—including cryptographically verifiable distributed ledger states, venue-native order books, and modern feeds like Pyth—for DeFi platforms, tokenized ATSs, and crypto-native venues under the Commission’s Innovation Exception framework.
Maintain investor protection through disclosure, timestamp integrity, and supervisory controls instead of enforcing reliance on centralized SIP infrastructure, which imposes cost and governance inefficiencies incompatible with modern markets.
The SEC should use its exemptive authority and staff guidance to enable tokenized securities trading under clear, principles-based conditions while formal rulemaking is developed.
A technology-neutral regulatory approach is essential to avoid rules that become obsolete and to ensure fair competition without favoring specific technologies.
Interim measures like pilot programs and conditional relief are critical to gather data, address investor protection and oversight concerns, and inform comprehensive rulemaking.
OTCM’s ST22 Security Token model fully satisfies SEC Category 1 requirements, including direct issuer board authorization, SEC-registered transfer agent custody, CUSIP assignment, and 1:1 preferred share backing.
The submission advocates targeted regulatory relief and safe harbor provisions for issuer-authorized tokenization models serving abandoned OTC markets, emphasizing qualified custody and verifiable 1:1 backing.
OTCM integrates protective conversion triggers and programmable compliance controls (e.g., circuit breakers, wallet concentration limits) to mitigate counterparty and bankruptcy risks identified by the SEC.
The proposed Digital Markets Restructure Act of 2026 establishes a uniform federal framework for the issuance, trading, custody, and supervision of digital assets, preempting inconsistent state laws and eliminating duplicative registration requirements for entities operating under joint SEC and CFTC oversight.
Regulatory jurisdiction over digital assets is determined by a risk-based classification model: enterprise risk falls under SEC, exposure risk under CFTC, and market risk is subject to joint oversight, with hybrid instruments supervised collaboratively and lead supervisor designation rotating as risk profiles change.
The Act introduces proportionate, technologically adaptive regulation, recognizing that digital assets may modularize economic rights and risks, and mandates that regulatory requirements scale according to residual risk rather than asset form or label, with safe harbor provisions for innovation and privacy-preserving compliance mechanisms.
The SEC’s exemptive authority under Section 36 of the Exchange Act allows exemptions only if “necessary or appropriate in the public interest” and consistent with investor protection, requiring consideration of efficiency, competition, and capital formation.
Exempting DeFi trading venues and order-entry firms from registration could disapply core investor protections (e.g., best execution, trade reporting, financial responsibility), creating a parallel regulatory regime for the same securities.
Granting exemptions based solely on technological differences risks regulatory arbitrage, undermining market integrity and potentially impairing liquidity, transparency, and resiliency across U.S. equity markets.
