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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.
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.
Public Offerings, Security Status, Tokenization, Trading
The letter underscores that applying existing securities-law pathways (Reg A, Reg D, Reg CF, broker dealer requirements, transfer agent rules, and blue sky compliance) to millions of small value real estate tokenizations is economically prohibitive, creating a structural mismatch between current securities regulation and the scale of RWA tokenization.
It raises the question of whether the SEC will consider new, scalable regulatory frameworks tailored to real property tokenization, distinct from those used for institutional grade tokenized assets, to avoid overwhelming regulatory capacity.
It proposes AI assisted disclosure and verification systems as a potential lawful infrastructure for scalable compliance, while acknowledging legal concerns around delegation, data reliability, and alignment with state property law.
Standardized compliance interfaces such as ERC‑7943 can reduce operational risk and fragmentation by enabling consistent eligibility checks, transfer controls, freezing, and enforcement mechanisms across tokenized instruments.
The existence or absence of onchain compliance controls should not be treated as a legal classification test; tokenization does not alter whether the underlying asset is a security under U.S. law.
Tokenized instruments incorporating administrative powers like freezing or forced transfers require transparent disclosure of authority, governance processes, emitted events, and remediation pathways to safeguard investor protection.
The letter urges the SEC to favor prospective rulemaking over individualized no‑action or exemptive relief, arguing that selective relief fragments the market, creates uneven treatment, and implicitly advantages entities able to petition for relief.
It recommends establishing a formal safe harbor via notice‑and‑comment to accommodate decentralized networks that cannot seek exemptive relief, enabling tokenization on both permissionless and permissioned systems with appropriate investor protections.
The letter argues that tokenized‑security recordkeeping and compliance functions can be embedded directly in blockchain systems, potentially reducing or eliminating mandated transfer agents and other intermediaries, provided issuers retain responsibility and optional delegation rights.
SIFMA (Securities Industry and Financial Markets Association)
Wallet providers performing order‑routing, price‑curation, execution‑related functions, or earning transaction‑based compensation may be deemed brokers under the Exchange Act, even without custody of customer assets.
Broker analysis is fact‑specific, requiring a holistic evaluation of wallet‑provider activities; the SEC v. Coinbase ruling does not create a categorical exemption for non‑custodial wallet providers.
Regulatory clarity should ensure “like activities are regulated alike,” preventing regulatory arbitrage and ensuring wallet providers performing securities‑intermediation functions meet broker‑dealer obligations.
Both EU and U.S. frameworks converge on the need to define the legal nature of a token before issuance, not after circulation. This includes identifying whether it is a financial instrument under MiFID II, a crypto asset under MiCAR, or subject to U.S. securities law.
The token’s legal identity cannot be inferred from the asset it references. Tokenization may create a new legal object, requiring autonomous analysis of rights, transferability, and executable behavior.
Declared rights and restrictions in issuance documents must align with the smart contract’s executable logic. Divergence between narrative and technical behavior triggers regulatory reclassification and systemic risk.
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 replace the current one-dimensional “best execution” rule with a principles-based, multi-factor framework that accounts for factors like certainty of execution, privacy, atomicity, finality, and all-in cost, especially in tokenized markets.
The SEC should confirm that the Order Protection Rule under Reg NMS does not apply to transactions offering non-regular-way settlement (e.g., atomic settlement), aligning with existing law rather than requiring new exemptions.
Regulators should prioritize transparency, competition, and innovation by moving from prescriptive routing mandates to principles- and disclosures-based compliance, and consider sandboxes for testing new execution modalities.
Custody, Public Offerings, Security Status, Tokenization, Trading
Congress must establish common-sense rules for crypto firms engaging in traditional financial activities (capital raising, custody, trading) to ensure investor protection and market integrity.
Registration requirements, anti-fraud provisions, and oversight mechanisms are essential to mitigate risks such as market volatility, financial crimes, and scams, preserving trust in digital asset markets.
Legislation should define when cryptocurrencies qualify as securities, commodities, or other asset classes to enable proper compliance and handling of unclaimed digital assets.
