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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.
Ondo urges the SEC to support both direct and intermediated pathways for tokenized securities, including models involving securities entitlements held through DTC, and to provide targeted regulatory relief for such models1.
The letter advocates for the SEC to formally recognize and permit the use of public, permissionless blockchains in tokenized securities markets, asserting that such systems align with investor protection goals and ownership rights1.
Ondo supports the SEC’s proposed “innovation exemption” and recommends prioritizing regulatory action to enable tokenized securities products for retail investors, particularly those backed by securities held in DTC1.
Custody, Public Offerings, Security Status, Tokenization
Existing federal securities laws (e.g., Securities Act of 1933, Exchange Act of 1934, Investment Company Act of 1940) do not consistently apply to the digital access layer through which institutions engage with tokenized real-world assets (RWA), resulting in fragmented oversight and uneven disclosure standards.
The letter proposes a non-licensing federal framework to standardize expectations for digital access platforms—covering yield presentation, lifecycle reporting, and eligibility criteria—without altering the regulatory treatment of the underlying assets.
A new recognition category is suggested for digital platforms that facilitate access to tokenized exposures, aiming to clarify their role without imposing broker-dealer or custodian obligations, thereby improving regulatory clarity and market integrity.
Securitize’s issuer-sponsored tokenization model ensures that tokenized public equities are issued directly by the issuer, conferring the same legal rights (voting, dividends, corporate actions) as traditional securities, with all investors KYC-verified and transfers governed by smart contracts for compliance.
Wrapped token and derivative models introduce additional counterparty risk, lack equivalent ownership rights, and often fail to meet KYC/AML and transfer restriction requirements, raising significant regulatory concerns and potential for non-compliance with U.S. securities laws.
Securitize’s model operates fully within existing securities regulations and does not seek exemptions, contrasting with other models that may rely on regulatory arbitrage or require exemptive relief, and advocates for modernization of certain rules to accommodate blockchain solutions.
Public Offerings, Security Status, Tokenization, Trading
The letter emphasizes that digital asset markets involve transactions between spot commodities and securities, necessitating a novel regulatory framework distinct from traditional finance.
CoinRoutes warns that imposing traditional market regulations (e.g., tick size, fee caps) on crypto markets could increase trading costs and reduce competitiveness, potentially pushing liquidity to less regulated international venues.
Effective monitoring of manipulative behaviors like momentum ignition requires integrated surveillance across both spot and derivative crypto markets—something not currently achieved in traditional equity markets.
Custody, Public Offerings, Security Status, Tokenization
The proposal recommends that the SEC define and ban "Non-Compliant Memecoins" based on failure to meet minimum standards such as proof of utility, liquidity lock, third-party audit, AML/KYC compliance, and transparent governance.
It advocates extending principles from the GENIUS Act and Clarity Act—originally designed for stablecoins and DeFi—to memecoins, thereby closing a regulatory gap and aligning with the investor protection mandates of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The proposal outlines a three-phase implementation plan involving rule publication, automated enforcement via oracles and APIs, and full ecosystem compliance with AI-driven monitoring, in coordination with the CFTC for decentralized platforms.
Custody, Public Offerings, RFI Responses, Security Status, Tokenization
Cryptocurrencies, despite lacking traditional security characteristics, should be subject to disclosure and protection standards akin to those under the Securities Act of 1933 and the Investment Company Act of 1940 due to their accessibility to unsophisticated investors.
The absence of intrinsic value, backing, or cash flow in cryptocurrencies makes them particularly risky and difficult to value using conventional corporate finance methods, necessitating enhanced regulatory scrutiny.
The SEC is urged to initiate a formal notice-and-comment rulemaking process to ensure inclusive public participation and to establish clear regulatory frameworks that promote responsible innovation and market integrity.
Lilya Tessler and Kate Lashley, Sidley Austin LLP on behalf of Ava Labs, Inc. and Owl Explains
Ava Labs proposes a new regulatory category—“Protocol Tokens”—defined as intangible, commercially fungible assets integral to the functioning of a protocol. These tokens should not be classified as securities, regardless of whether they are in a pre-functionality or functional state.
The SEC should adopt a rulemaking framework that presumes offers and sales of Pre-Functionality Protocol Tokens are investment contracts, but allows for rebuttal and provides a new exemption (“Regulation PT”) with tailored disclosure, AML/KYC, and filing requirements.
SEC-registered intermediaries (e.g., broker-dealers, ATSs, NSEs) should be permitted to support Protocol Token activities under existing frameworks, with targeted amendments and interpretive guidance. A transitional grace period should allow such activities pending final rulemaking.
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
Paradigm urges the SEC to issue interpretive guidance confirming that tokenized securities retain their status as securities under federal law, ensuring that blockchain-based issuance does not alter legal obligations under the Securities Act or Exchange Act.
The letter recommends that the SEC clarify and potentially revise transfer agent and recordkeeping rules to accommodate blockchain-based systems, including allowing issuers to act as their own transfer agents and recognizing distributed ledgers as official books and records.
Paradigm proposes updates to registration forms (e.g., Form S-1) and ongoing disclosure requirements to reflect the technical specifics of tokenized securities, including smart contract features, custody mechanisms, and onchain governance, while maintaining investor protection standards.
Custody, Public Offerings, Security Status, Tokenization
The letter urges the SEC to distinguish between fundraising tokens (which should be regulated as securities) and protocol/utility tokens (which should not), to avoid overregulation of decentralized infrastructure.
It advocates for treating smart contracts as neutral software infrastructure rather than financial instruments, emphasizing their role in automating logic rather than raising capital.
Firepan emphasizes that software providers like itself should not be subject to securities regulation when they do not engage in custody, compliance, or issuance—those roles should remain with licensed financial entities.
James Q. Walker, Lowell D. Ness, Arthur S. Greenspan, Valeska Pederson Hintz, Zeeve Rose, Kiran Gill, Perkins Coie LLP
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
The SEC’s Division of Corporation Finance concluded that proof-of-work (POW) mining activities do not constitute the offer and sale of securities under federal securities laws.
The proof-of-stake (POS) validation process should not be considered an investment contract security under the Howey test, as rewards are compensation for technical validation services, not profits based on the efforts of others.
The issuance of liquid staking tokens (LSTs) should not be considered the offer or sale of a new security, as they are temporary stand-ins for the original staked crypto assets.
