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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 argues that Citadel’s attempt to classify all entities and technologies involved in DeFi transactions as SEC-registered intermediaries is legally flawed, as autonomous software and developers without custody or control over user assets do not meet the statutory definitions of “broker” or “dealer.”
The signatories assert that expanding the definitions of “exchange” and “broker-dealer” to include DeFi protocols exceeds the SEC’s statutory authority and risks misclassifying non-intermediary software infrastructure, undermining innovation and regulatory clarity.
The letter supports notice-and-comment rulemaking for tokenized equities but urges the SEC to adopt frameworks—such as safe harbors—that distinguish between centralized and decentralized systems, ensuring that only entities posing traditional risks are subject to registration.
The framework proposes that Solana-based ETP issuers provide periodic public disclosures detailing validator allocations, concentration policies, and incidents, enabling the SEC to monitor systemic risks without prescribing protocol-level changes.
The SEC is urged to formally acknowledge that stake concentration in Solana ETPs poses material investor protection risks, including transaction censorship, governance capture, and network halts, thereby falling squarely within its jurisdiction.
Validators receiving ETP stake must disclose governance voting intentions and maintain independence from issuers and custodians to prevent proxy-advisory style influence and ensure fair market access.
GUARDD urges the SEC to use its exemptive authority under Section 36 of the Exchange Act to formally recognize "Qualified Disclosure Publishers" (QDPs), enabling compliant secondary trading of exempt and tokenized securities without requiring full Exchange Act reporting.
The proposal includes a request for federal preemption of inconsistent state Manual Exemption provisions, aiming to streamline secondary trading across jurisdictions while preserving states’ anti-fraud enforcement powers.
GUARDD recommends that QDPs be required to publish token-specific data (e.g., contract address, blockchain network, transfer restrictions, audit status) alongside Rule 15c2-11(b) disclosures to support on-chain secondary trading on regulated venues.
All smart contract code and automated system outputs are explicitly subordinate to written legal documentation. In any conflict, ambiguity, or inconsistency, the written terms of the agreement govern, ensuring that legal rights and obligations are not overridden by code execution.
The pilot does not seek exemptions from existing securities laws. All securities issued remain subject to Securities Act registration or exemption requirements, and all intermediaries (broker-dealers, custodians, transfer agents) retain their regulatory obligations under SEC, FINRA, and state law. The system is modular and can operate under SEC jurisdiction independently of other agencies.
The framework provides for a multi-body emergency override mechanism, allowing correction of errors or reversal of transactions only under strict conditions (e.g., arbitration award non-compliance, fraud, system malfunction, or imminent harm). All such actions require supermajority approval from three governance bodies and are subject to post-event independent review and public disclosure.
The document proposes IP Bonds and IP CDOs as structured financial instruments backed by intellectual property, enabling their use as collateral in debt markets and aligning with international financial standards such as IAS 38/IFRS.
It calls for formal recognition of IP Bonds within existing financial frameworks (e.g., ISDA, ICMA, SIFMA), including their eligibility for repo markets, post-trade transparency, and ESG classification under ICMA principles.
The Eurasian Standard of IP Valuation is positioned as a global benchmark, with requests for WIPO endorsement, interagency working groups, and amendments to IFRS to support on-chain IP valuation and prevent regulatory fragmentation.
The framework establishes a qualified custody architecture using FIPS 140-3 Level 3 Hardware Security Modules (HSMs) and “Good Control Locations,” aligning with the SEC’s May 2025 guidance to ensure broker-dealer possession and control of tokenized municipal securities.
Tokenized municipal securities are treated as “financial assets” in “securities accounts” under UCC Article 8, providing bankruptcy priority, security interest perfection through control, and enforceable entitlement rights, even where SIPA coverage may not apply.
A legally binding one-to-one mapping between blockchain tokens and standard CUSIP identifiers ensures universal legacy compatibility, enabling seamless conversion to traditional DTCC book-entry form and eliminating stranded asset risk.
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.
The SEC should not grant broad exemptive relief from the statutory definitions of “exchange” and “broker-dealer” for DeFi trading protocols, as doing so would undermine investor protections and create a dual regulatory regime for the same securities.
Many DeFi trading protocols and associated participants (e.g., developers, wallet providers, AMMs) meet the legal definitions of “exchange” or “broker-dealer” and should be regulated accordingly under existing securities laws.
The SEC should pursue a notice-and-comment rulemaking process to evaluate tokenization initiatives, ensuring that any regulatory changes preserve core investor protections and apply equally to tokenized and traditional equities.
The SEC must clearly define the boundary beyond which government financial surveillance is illegitimate before endorsing any compliance architecture in decentralized systems.
Broker-dealers should be permitted—and even encouraged—to offer privacy-enhancing tools (e.g., RAILGUN, privacy pools, Zcash shielded transactions) as part of their fiduciary duty to protect clients, especially in post-withdrawal digital asset activity.
The SEC should not adopt international guidelines like the FATF Travel Rule without formal rulemaking under the Administrative Procedures Act, especially while related constitutional challenges are pending.
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.
