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
DTI Foundation

Re: Public input following announcement of new crypto task force 		Crypto ETPs, Public Offerings, Security Status, Tokenization, Trading
  • The DTI Foundation emphasizes the importance of using the digital Token Identifier (DTI) for unambiguous identification of crypto assets within any future regulatory framework.
  • The DTI is recognized as a global ISO standard and is increasingly adopted for various regulatory reporting requirements in different jurisdictions.
  • The DTI Foundation offers a free service to download the entire DTI registry, ensuring transparency and accessibility for all stakeholders.
Chelsea Pizzola, Cumberland DRW

Re: Crypto Task Force Input: Secondary-Market Trading 		RFI Responses, Safe Harbor, Security Status, Tokenization, Trading

  • Cumberland believes that many secondary-market transactions in native crypto assets are not securities transactions, even if the crypto asset was initially offered and sold as part of an investment contract.

  • Cumberland supports adoption of Commissioner Peirce’s proposed safe harbor or similar relief to alleviate concerns for primary issuance and secondary-market trading of Natively Digital Securities.

  • Cumberland suggests that the SEC should consider providing interpretive or no-action relief from certain aspects of the tests for determining whether securities have a ready market, limited
Figure Markets

Re: The Use of YLDS as a Settlement Mechanism for Non-Security Transactions 		Custody, Security Status, Tokenization, Trading

  • The use of Figure Transferable Certificates (YLDS) as a payment mechanism for non-security crypto transactions on the Crypto Platform does not require registration as a broker, securities exchange, or alternative trading system.

  • YLDS are registered securities under the U.S. Securities Act and are issued by a registered investment company, providing protections and disclosures under the Securities Act and the Investment

  • The Crypto Platform facilitates peer-to-peer transactions in non-security crypto assets, and the use of YLDS as a payment method is optional and does not constitute "effecting" securities transactions.
Kecheng Lai, Knowpia Inc.

RE: The Future is Here, Now! A Comprehensive Examination of the STO+ Framework and its Regulatory Implications 		Custody, Public Offerings, Regulatory Sandbox, RFI Responses, Safe Harbor, Security Status, Tokenization, Trading
  • The STO+ token model aims to ensure compliance with existing legal frameworks while fostering innovation that benefits both investors and users.
  • The conversion mechanism between ST and ST+ tokens is designed to be lawful and beneficial to investors, aligning with existing securities law requirements.
  • The application of SEC Rule 144 one-year lock-up period to ST+ tokens is deemed inappropriate and counterproductive for the STO+ framework.
Dimitry Jean-Noel II

RE: The Fork in America's Financial Future: From Globalization to Sovereignty 		Regulatory Sandbox, Security Status, Tokenization, Trading
  • The document discusses the structural consequences of deglobalization and the threats posed by dedollarization efforts.
  • It examines the systemic failures in the current financial architecture, including economic, regulatory, and institutional weaknesses.
  • The analysis highlights the need for a future-proof financial architecture that integrates decentralized finance, blockchain-based dollar representations, and asset tokenization under a fair regulatory framework.
Dimitry Jean-Noel II

RE: The Future of Global Financial Systems: Integration of Traditional Finance and Decentralized Technologies 		Custody, Security Status, Tokenization, Trading
  • Blockchain-based settlement systems are revolutionizing transaction processing by eliminating intermediaries, reducing settlement times, and enhancing transparency.
  • Asset tokenization is transforming ownership representation, enabling fractional ownership, increased liquidity, and streamlined transactions.
  • Quantum computing threats necessitate immediate preparation for quantum-resistant cryptography to protect current cryptographic systems underpinning financial security.
Dimitry Jean-Noel II

RE: Securing Digital Dollar Dominance: A Comprehensive Framework for Stablecoin Regulation and Innovation 		Custody, Regulatory Sandbox, Safe Harbor, Security Status, Tokenization, Trading
  • The framework mandates 100% reserve backing with high-quality liquid assets, including cash, Treasury bills, and overnight reverse repurchase agreements.
  • It requires stablecoin issuers to maintain robust liquidity management, including stress testing and contingency funding plans.
  • The framework establishes clear redemption rights for stablecoin holders, ensuring they can redeem at par value within specified timeframes.
     
Kiln

Re: There Must Be Some Way Out of Here 		Crypto ETPs, Crypto Lending, RFI Responses, Security Status, Tokenization, Trading
  • Kiln argues that Proof-of-Stake (PoS) blockchain activities, such as staking, do not involve the offer and sale of securities under the Securities Act and Exchange Act.
  • Kiln emphasizes that staking rewards are protocol-defined and not derived from the managerial efforts of others, thus falling outside the scope of the Howey test for investment contracts.
  •  Kiln supports regulatory clarity that distinguishes between core blockchain infrastructure activities and traditional securities transactions.
Professor Edward Lee, Santa Clara University School of Law

Re: Recommendations for Treatment of NFTs for Digital Art Under Securities Law and the First Amendment 		Public Offerings, Security Status, Tokenization
  • NFTs for digital art do not constitute investment contracts under the Securities Act of 1933.
  • Requiring securities registration of NFTs for digital art violates the First Amendment by imposing prior restraints on creators of artistic expression.
  • The SEC should issue public guidance stating that NFTs used for digital art do not constitute securities or “investment contracts.”
Kechang Lai, Knowpia Inc.

Recommendation Letter - Supplementary Clarification No. 3 - Recommendation for Operational Structure and Clarification of STO+, ST, and ST+ Mechanisms 		Custody, Security Status, Tokenization, Trading
  • ST tokens are subject to lock-up periods under Reg D, Reg CF, and other relevant securities laws.
  • KYC and AML verification are mandatory for all ST token holders before receiving their tokens.
  • Smart Contracts govern the issuance, transfer, and conversion of ST and ST+ tokens, ensuring compliance with SEC regulations.