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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 proposal applies the Howey Test to IoT-enabled tokens, affirming that most tokenized physical assets—especially those offering fractional ownership and income rights—qualify as securities under U.S. federal law, thereby triggering SEC jurisdiction and compliance obligations.
The framework mandates that smart contracts embed securities law requirements, including automated enforcement of Regulation D holding periods, accredited investor verification, and transfer restrictions, ensuring immutable compliance with federal securities regulations.
A proposed Self-Regulatory Organization (SRO), under SEC supervision, would certify and oversee oracle operators, requiring them to meet technical, operational, and financial standards, including minimum capitalization, bonding, and compliance with AML/KYC and reporting obligations.
Bank Policy Institute, Association of Global Custodians, and Financial Services Forum
The SEC should not expand the definition of “qualified custodian” to include entities like state-chartered trust companies unless they are subject to regulatory oversight and prudential standards equivalent to those applied to banks.
Investment advisers should not be permitted to self-custody client crypto assets without full compliance with the Investment Advisers Act and related custody rules, as this would expose investors to heightened risks and conflicts of interest.
Any changes to the custody framework for crypto assets must maintain the core principles of asset segregation, separation of functions, and proper control to ensure investor protection and market stability.
Crypto ETPs, Public Offerings, Regulatory Sandbox, Security Status, Tokenization, Trading
Tokenized securities are treated as securities under U.S. law, and the framework ensures compliance with the Securities Act of 1933 and the Securities Exchange Act of 1934, including support for Regulation D, Regulation A, and Regulation S offerings, with programmable enforcement of transfer restrictions and disclosure obligations.
The framework enables registered transfer agents to maintain blockchain-based master securityholder files, in compliance with SEC Rules 17Ad-1 through 17Ad-23, allowing for tamper-resistant records, automated corporate actions, and privacy-preserving off-chain personal data storage.
The proposal includes a comprehensive AML/KYC compliance system using verifiable digital identities and smart contracts to enforce transaction-level compliance, integrated with OFAC screening and automated Suspicious Activity Report (SAR) generation, aligning with Bank Secrecy Act and FinCEN requirements.
The framework affirms that while the SEC lacks authority over primary sovereign debt issuance, it retains jurisdiction over secondary market activities involving tokenized sovereign debt, including trading platforms, public offerings (e.g., ICOs, STOs), and broker-dealer conduct, under existing securities laws.
All providers of tokenized sovereign debt instruments must obtain SEC certification, undergo formal verification of smart contracts, and comply with ongoing supervision requirements, including quarterly compliance attestations and annual third-party audits.
The framework mandates the use of SEC-certified regulatory oracles for real-time compliance verification and introduces a regulatory sandbox to allow conditional exemptions and phased compliance for innovative tokenization models, aligning with Project Crypto and international standards.
NSCP urges the SEC to provide clear, objective criteria for determining whether a digital asset is a security or commodity, warning that current reliance on subjective “facts and circumstances” tests places undue interpretive burdens on compliance officers.
NSCP requests detailed guidance on how SEC-registered investment advisers can comply with Custody Rule 206(4)-2 when using digital asset custodians, particularly regarding the use of omnibus accounts, self-custody, and multi-party computation (MPC) key management.
NSCP emphasizes the need for coordinated rulemaking between the SEC, CFTC, and other regulators to avoid duplicative or conflicting compliance obligations, especially as Congress considers legislation that may assign overlapping jurisdiction.
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.
The proposal introduces a phased regulatory sandbox supervised initially by the SEC, with potential pathways to formal safe harbor protections and expedited registration for compliant participants—offering legal clarity and reduced regulatory friction for innovators.
The framework explicitly structures "EduTokens" as non-transferable, non-speculative utility tokens to avoid classification as securities under the Howey Test, referencing precedents like SEC v. Kik and SEC v. Telegram, and aligning with SEC no-action letters.
The proposal outlines a phased inter-agency model led by the SEC, with initial jurisdiction confined to areas of clear SEC authority (e.g., Regulation D offerings), while preserving federal supremacy in conflicts with state law under Article VI of the U.S. Constitution.
Proposes the creation of a Federal Reserve HBAR Reserve & Lending Facility (HRLF), enabling HBAR-denominated loans for infrastructure, energy, and housing, with repayment terms and custody hardened under a Post-Quantum Financial Infrastructure Framework (PQFIF).
Assigns the SEC responsibility for monitoring issuance, custody, and lending structures involving HBAR, ensuring regulatory compliance within a post-blockchain framework.
Advocates for a national program (“HBAR in American Homes”) encouraging U.S. households to accumulate HBAR as a pro-dollar collateral layer, aiming to decentralize supply and reinforce U.S. monetary sovereignty.
Wintermute urges the SEC to affirm that broker-dealers may trade tokenized securities for their own account, self-clear and settle such trades, and custody proprietary positions using wallet software, without triggering customer protection rules.
The SEC should clarify that providing liquidity or trading tokenized securities on DeFi protocols—whether by U.S. or non-U.S. participants—does not, by itself, require broker-dealer registration or trigger U.S. jurisdiction, absent targeted solicitation.
The SEC should confirm that network tokens (e.g., Bitcoin, Ethereum), which are essential to decentralized protocols, are not securities under the Howey Test, even if initially distributed in fundraising transactions or traded speculatively.
