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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.
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.
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.
Determining whether non-custodial wallet providers qualify as brokers under the Exchange Act requires a functional, facts-and-circumstances assessment—not reliance on labels or interface appearance.
The court held that non-custodial wallets with embedded interfaces do not constitute brokers absent meaningful participation in effecting transactions, reinforcing that commission-based payment alone is not dispositive.
SEC and judicial precedents confirm that transaction-based compensation and routing services, standing alone, are insufficient to trigger broker status without discretionary control or core trading functions.
Public Offerings, Regulatory Sandbox, Security Status
The comment references an Op-Ed intended to inform the SEC’s review process, suggesting reliance on external expert analysis for regulatory considerations.
It emphasizes investor protection in the context of evolving financial markets, aligning with the SEC’s statutory mandate under securities laws.
The submission implicitly advocates for regulatory responsiveness to rapid changes in financial products and practices, which may impact compliance and enforcement frameworks.
Tokenization cannot rely solely on technical execution; legal legitimacy must be established before issuance. Without a clear, verifiable legal regime and enforceable rights embedded ex ante, automatic execution creates systemic risk.
SEC no-action letters do not constitute approval or doctrinal clarity; they are ad hoc containment tools. Their recurrence reflects the absence of a standardized framework for determining whether a token qualifies as a security or other legal object prior to issuance.
Smart contracts transform norms into automatic execution, eliminating ex post correction margins. This demands rigorous alignment between legal documentation and code, with enforceable restrictions coded and auditable to prevent reliance on narrative-only limitations.
Current wealth-based thresholds under Rule 501 of Regulation D are outdated; Fairmint advocates for knowledge-based and conditional accreditation frameworks to expand investor access.
Proposal for an SEC-administered, easily accessible online exam (“Accreditation Series”) to qualify individuals regardless of wealth or income, aligning with the Equal Opportunity for All Investors Act of 2025.
Suggests embedding accreditation and eligibility checks into programmable securities via smart contracts, enabling pre-trade enforcement and cryptographic auditability for regulatory compliance.
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.
