Crypto Task Force Written Input

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.

Date Written Input Topic(s) Key Points
CCI's Proof of Stake Alliance (POSA)

Re: Law and Policy Considerations Relevant to Staking Services 		Custody, RFI Responses, Safe Harbor, Security Status, Trading
  • Staking and Staking Services do not constitute securities transactions under federal securities laws, as they do not meet the criteria for investment contracts or notes.
  • The provision of Staking Services involves technical activities that secure blockchain networks and are compensated through protocol-defined rewards, not managerial efforts.
  • Regulatory clarity is requested to confirm that staking activities do not constitute the offer and sale of securities, which would help the industry flourish with U.S. participants.
     
Charles V. Callan, Broadridge Financial Solutions

Subject: Comments on the SEC Crypto Task Force’s February 21, 2025 Request for Information (“RFI”) 		Custody, Public Offerings, RFI Responses, Security Status, Tokenization, Trading
  • Broadridge supports the development of tailored disclosure requirements for crypto assets to enhance investor protection and suggests that disclosures should include both traditional financial information and crypto-specific details.
  • The letter emphasizes the importance of frequent updates on material information for crypto assets, with a recommendation for monthly updates or updates as changes occur.
  • Broadridge highlights the need for greater financial literacy education to help investors understand the unique attributes and risks associated with crypto assets.
Lilya Tessler, Sidley Austin LLP, on behalf of The Digital Chamber

Security Status of Certain Crypto-Asset (Token) Transactions 		Custody, RFI Responses, Security Status, Trading
  • The letter discusses the criteria for determining whether certain crypto-asset transactions qualify as securities under existing regulations.
  • It outlines the regulatory implications for entities involved in the issuance, trading, and custody of these crypto-assets.
  • The letter emphasizes the need for clear guidelines to ensure compliance and protect investors
Lee W. McKnight, Syracuse University School of Information Studies

Distinguishing Jokers from Thieves. Rug Pullers vs SEC Crypto Policies 3.0: Nolo Contendere by Regulatory Design 		RFI Responses, Security Status, Tokenization, Trading
  • The document emphasizes the need for the SEC to consider AI-powered automation and efficiency gains in market oversight mechanisms to improve investor protection.
  • It suggests that the SEC should support demonstrations of exploratory instances of new tools to encourage entrepreneurs and reassure investors.
  • The document highlights the importance of a clear and consistent regulatory framework to encourage innovation and protect investors in digital asset markets.
Etherealize

Modernizing Transfer Agent Rules for U.S. Leadership in Tokenized Securities 		Custody, RFI Responses, Safe Harbor, Security Status, Tokenization
  • The memo urges the SEC to issue interpretive guidance clarifying that ancillary actors in decentralized blockchain systems are not considered transfer agents.
  • It recommends using the SEC's exemptive authority to create blockchain-based exemptions to existing transfer agent registration mandates.
  • The memo suggests exploring smart contract equivalency to fulfill specific transfer agent functions and establishing standards for blockchain record-keeping systems.
John A. Zecca, Nasdaq, Inc.

Re: What’s in a Name? A Stock by Any Other Name ... Nasdaq Inc.’s Response to “There Must Be Some Way Out of Here” 		Custody, Public Offerings, Regulatory Sandbox, RFI Responses, Safe Harbor, Security Status, Tokenization, Trading
  • The document emphasizes the need for a clear and predictable taxonomy for digital assets to ensure consistent regulation and avoid market distortions.
  • It advocates for a regulatory framework that balances innovation with investor protection, suggesting a light-touch regime for digital assets posing lower risks.
  • The document proposes the establishment of a temporary safe harbor for digital assets not yet clearly classified, allowing them to go to market quickly while pending definitive regulatory classification.
Lilya Tessler, Sidley Austin LLP on behalf of Ava Labs, Inc. and Owl Explains

RE: Asset-Based Classification; Decentralization; Regulatory Status of Technology Functions; Treatment of Infrastructure Providers 		RFI Responses, Safe Harbor, Security Status, Tokenization
  • The document proposes a high-level framework for token classification based on the nature of the asset, advocating for an asset-based approach to evaluating tokens under federal securities laws.
  • It explains why technology functions inherent to the operation of blockchains do not constitute or result in securities and why infrastructure providers on blockchain networks are not securities intermediaries.
  • The submission discusses the importance of regulatory clarity and consistency across different technologies and regulatory agencies, emphasizing that the nature of the asset should determine its legal and regulatory treatment.
     
Paradigm

The Key Neutrality of Baselayer Markets A Response to Questions Posed in SEC Commissioner Hester Peirce’s “There Must Be Some Way Out of Here” 		RFI Responses, Security Status, Trading
  • MEV (Maximal Extractable Value) does not meet the legal standards for securities fraud, insider trading, or best execution violations under U.S. law.
  • Regulatory intervention in MEV could disrupt a self-correcting market structure, and a tech-neutral, flexible approach is recommended.
  • MEV activity does not involve the scienter required for claims under Section 10(b), Rule 10b-5, or Section 9 of the Exchange Act.
     
DeFi Education Fund

Re: Token Safe Harbor Guiding Principles 		RFI Responses, Safe Harbor, Security Status, Tokenization, Trading
  • The Safe Harbor should be technology-agnostic, focusing on substance over form and associated risks rather than specific technologies.
  • Eligibility criteria for the Safe Harbor should be broad and inclusive, accommodating a wide range of technologies and projects.
  • Disclosure requirements should be carefully calibrated to provide material information to token holders while being commercially feasible for initial development teams.
OpenZeppelin

Recommendations Regarding Independent Security Audit Reports 		Custody, RFI Responses, Safe Harbor, Security Status, Tokenization, Trading
  • Implement mandatory third-party security audits for blockchain protocols to ensure compliance with security standards and reduce risks.
  • Require detailed documentation of protocols, including governance mechanisms, technical specifications, and security measures.
  • Establish a global organization to formalize auditing standards and certify qualified auditors for blockchain technology.