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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.
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.
Custody, Public Offerings, Regulatory Sandbox, Security Status, Tokenization, Trading
The pilot treats all tokenized municipal instruments as securities under existing federal law, operating within the scope of the Securities Act of 1933 and Exchange Act of 1934, without seeking exemptions or novel classifications.
The legal rights and obligations of all parties are governed by a traditional Master Indenture, which prevails over any discrepancies with smart contract behavior or distributed ledger records.
Authorized municipal officials may override smart contract operations under defined conditions (e.g., force majeure, national security), with multi-signature authentication, real-time disclosure, and ex-post audit requirements.
The framework proposes a legally enforceable structure for using tokenized U.S. Treasury bills and GENIUS Act-compliant stablecoins as derivatives margin, with strict eligibility, custody, and redemption standards to ensure investor protection and bankruptcy remoteness.
It recommends a phased regulatory sandbox pilot limited to institutional participants, with conservative concentration caps, enhanced haircuts, and mandatory reporting to validate operational resilience before broader market adoption.
The submission calls for joint rulemaking by the CFTC and SEC to harmonize standards on tokenized collateral eligibility, valuation, and custody, reducing regulatory fragmentation and enhancing legal certainty across overlapping jurisdictions.
Securities Industry and Financial Markets Association (SIFMA)
Broad exemptions from federal securities laws for tokenized securities risk undermining investor protection, fragmenting markets, and creating regulatory arbitrage by allowing functionally identical activities to operate outside established oversight frameworks.
Entities performing intermediary-like functions in tokenized securities markets—whether centralized or decentralized—should be subject to the same regulatory obligations as traditional brokers, dealers, exchanges, and clearing agencies.
Any innovation exemption framework must be narrowly tailored, include investor and transaction limits, and be subject to public notice-and-comment rulemaking to ensure it supplements rather than substitutes for comprehensive regulation.
Exemptive relief should be narrowly tailored and only granted when it is necessary to enable a firm to offer a product or service on a level playing field, without undermining investor protection or market integrity.
Exemptive relief must not be used to bypass core regulatory obligations, especially where it would provide selective competitive advantages or reduce public scrutiny that would otherwise occur through formal rulemaking.
Any granted exemptive relief should be conditional, including requirements such as SEC oversight, AML compliance, governance structures, asset segregation, and demonstrable commitment to fair and orderly markets.
The proposal distinguishes between Participation Tokens (classified as high-risk securities under Regulation D), IP-NFTs (treated as securities representing intellectual property rights), and Utility Tokens (potentially non-securities if used solely for governance and protocol functions).
The Knowledge Provenance Protocol (KPP) seeks inclusion in the SEC’s innovation exemption sandbox, proposing tailored disclosure requirements, DAO registration pathways, and investor protection mechanisms for scientific funding models.
The protocol incorporates GENIUS Act-compliant stablecoins for royalty payments, aligning with the federal regulatory framework for payment stablecoins and ensuring compatibility with U.S. digital asset compliance standards.
Wintermute urges the SEC to clarify that broker-dealers using on-chain settlement for tokenized securities—without holding customer assets—qualify for the Customer Protection Rule’s (Rule 15c3-3) paragraph (k)(2)(i) exemption.
The firm recommends that proprietary traders and liquidity providers on DeFi protocols should not be classified as “dealers” under the Exchange Act if they do not engage in customer-facing activities or market intermediation.
Wintermute proposes that broker-dealers be allowed to apply a 20% net capital haircut to non-security crypto assets with a “ready market,” determined by objective criteria such as trading volume and liquidity across centralized and decentralized platforms.
Dmytro Lyushenko and Oleksandr Tuholukov, NOTA LLC and NOTA Digital Currencies Research Center Inc.
The SEC should require qualified custodians of digital assets to adopt formal, written succession policies addressing death or incapacity of asset holders, including evidentiary standards, asset transfer procedures, and safeguards against unauthorized claims.
The SEC should define and regulate “digital vault” architectures as a distinct custody category, emphasizing cryptographic security, role separation, auditability, and integration with legal instruments like wills and court orders.
Issuers of Real-World Asset (RWA) tokens should be required to provide granular, machine-readable disclosures on asset linkage mechanisms, redemption rights, and potential systemic impacts on underlying markets.
Computershare advocates that listed issuers should retain discretion to issue tokenized securities directly, ensuring legal ownership is recorded on the Master Securityholder File (MSF), thereby preserving investor rights and issuer control.
The SEC should mandate that third-party tokenized securities be assigned distinct ISINs and stock codes, with clear disclosures to prevent investor confusion and to distinguish them from issuer-sponsored tokenized securities (ISTs).
Computershare recommends that updates to transfer agent rules remain technology- and format-neutral, avoiding references to specific technologies like blockchain, while still enabling secure and efficient tokenized securities processing under existing regulatory frameworks.
The SEC should adopt a technology-neutral approach to regulating crypto assets, extending existing staff positions, no-action relief, and interpretative guidance applicable to non-tokenized funds to tokenized funds as well.
The SEC should clarify and update regulations regarding the custody of crypto assets, including eligibility of custodians and self-custody arrangements under Section 17(f) of the Investment Company Act of 1940.
Any new regulations should be principles-based, not prescriptive, and should avoid imposing unnecessary compliance burdens, especially on smaller entities and market entrants.
