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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.
Public Offerings, Security Status, Tokenization, Trading
The letter emphasizes that digital asset markets involve transactions between spot commodities and securities, necessitating a novel regulatory framework distinct from traditional finance.
CoinRoutes warns that imposing traditional market regulations (e.g., tick size, fee caps) on crypto markets could increase trading costs and reduce competitiveness, potentially pushing liquidity to less regulated international venues.
Effective monitoring of manipulative behaviors like momentum ignition requires integrated surveillance across both spot and derivative crypto markets—something not currently achieved in traditional equity markets.
Epistria, LLC - Proving What Didn’t Happen -SSRN Comprehensive Paper
Evidentiary compliance reframes legal compliance from procedural trust to cryptographic proof, enabling organizations to demonstrate not only what occurred but also what did not—addressing evidentiary gaps that traditional logs, attestations, and blockchains cannot fill.
Audit-Verifiable Compliance Receipts (AVCRs) and Relational Merkle Trees (RMTs) provide legally defensible proof of non-reachability, allowing entities to demonstrate that prohibited access paths or unauthorized interactions were structurally impossible.
Lifecycle receipts (CSTPs) and destruction proofs (EIVs) offer cryptographic evidence of compliance with data retention and deletion mandates (e.g., GDPR, HIPAA), enabling reconciliation of conflicting regulatory obligations through verifiable state transitions.
Epistria, LLC - When Digital Evidence of “Nothing Happened” Isn’t Good Enough
Courts lack clear standards for evaluating digital evidence that purports to prove a negative (e.g., no access, no transaction), making such evidence vulnerable to challenge and potentially unreliable in litigation.
As cryptographically generated “negative receipts” emerge, courts will need to assess them using technology-neutral criteria like authenticity, integrity, and chain of custody—while also developing new standards specific to negative proofs.
Portable digital artifacts proving non-occurrence may be discoverable, raising concerns about privilege waiver and confidentiality, especially when such artifacts reveal internal systems or were not created under legal direction.
Evidentiary asymmetry in crypto markets undermines enforcement because regulators cannot prove the absence of misconduct (e.g., wash trading, front-running), creating a persistent "evidentiary debt."
Cryptographic receipts of absence offer a novel compliance mechanism by mathematically attesting that prohibited activities did not occur within a defined scope, enhancing auditability and legal defensibility.
Mandating or endorsing such receipts would support the SEC’s goals of clear regulatory boundaries, tailored disclosures, and stronger investor protections through verifiable compliance.
Private blockchains operated by companies should be governed by internal corporate structures (e.g., boards), ensuring accountability and operational continuity.
Coins used within private blockchains for governance and utility purposes should not be classified as securities if not offered to institutional investors or traded on public exchanges.
Transparent transaction visibility on private blockchains can reduce the need for external regulatory oversight while maintaining stakeholder trust.
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.
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.
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.
