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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 proposed framework defines “vaults” as smart-contract-based structures that pool digital assets, allocate them to yield-generating strategies, and allow participants to audit and receive proportional returns; legal analysis should focus on the conduct of humans involved, not the vault software itself.
Vaults may hold mixed asset types (digital securities, commodities, and other assets), requiring coordinated SEC and CFTC oversight; curators or advisors of mixed-asset vaults cannot be regulated coherently by either agency acting alone.
The framework proposes three regulatory tiers based on managerial discretion: Type I (Use) for off-the-shelf software, Type II (Follow) for predetermined strategies with mandatory co-investment, and Type III (Advised) for actively managed vaults, with joint SEC/CFTC oversight recommended for mixed-asset vaults.
The SEC’s transfer agent proposal allows blockchain-based master securityholder files, but does not address the need for a verifiable, dated, sourced issuance record that documents the facts about the issuer and asset—these facts are often missing or scattered, causing tokenized offerings to stall.
A robust issuance record should: (1) link every material fact to its source document, (2) timestamp each fact, (3) distinguish the type of evidence (issuer assertion, third-party review, authority issuance), and (4) preserve all versions without overwriting prior states.
The proposal’s requirements for exclusive control do not necessarily exclude public blockchains; transfer agents can maintain authority via smart contracts, and reconciliation between onchain and offchain records should be documented and explained, not prohibited.
Crypto Lending, Custody, Public Offerings, Security Status, Tokenization, Trading
U.S. regulatory guidance and recent SEC/Nasdaq/DTCC actions confirm that a tokenized security remains the same legal instrument under securities law, with its rights, protections, and obligations intact, regardless of digital representation.
Institutional tokenization requires maintaining a consistent relationship among the underlying asset or right, authoritative records, financial instrument, and digital representation, ensuring that legal status, encumbrances, and settlement remain intelligible as the instrument moves through market infrastructure.
A token or message may transfer between systems, but unless legal and economic status is tracked and preserved, the underlying rights, encumbrances, and settlement status may diverge, leading to potential legal uncertainty and operational risk.
Public Offerings, Regulatory Sandbox, Safe Harbor, Security Status, Tokenization, Trading
The submission requests the SEC to publish practical, pre-launch guidance for early-stage digital asset projects, including a checklist of facts developers should disclose and evaluate before public issuance, such as functional status, transferability, governance concentration, redemption features, and planned use of proceeds.
It recommends clarifying that referencing independently verified real-world assets or data does not alone establish an investment contract; legal analysis should focus on whether purchasers receive enforceable financial claims, expect profits from others’ managerial efforts, or are promised liquidity, appreciation, or return.
The submission urges coordinated regulatory classifications across agencies (SEC, Treasury, FinCEN, CFTC, state regulators) to provide coherent guidance on securities, commodities, payments, money-transmission, sanctions, and stablecoin questions before product launch.
The primary scalability constraint in programmable finance is not transaction execution, but the continuous coordination of institutional legitimacy and governance across interoperable financial systems. This bottleneck is a legal infrastructure issue, as it determines whether financial actions are authorized, enforceable, and institutionally valid.
Programmable Institutional Control architectures embed regulatory constraints, multi-signature mandates, and commercial law perimeters (e.g., UCC Article 12) directly into the control plane, enabling machine-verifiable compliance and transforming digital asset possession into legally protected property rights that survive insolvency and regulatory scrutiny.
Major collapses in digital asset markets (e.g., FTX, Celsius, Terra/Luna) are traced to governance failures—such as lack of segregation, legal clarity, and enforceable control—rather than settlement failures. Legal enforceability and operational legitimacy must be continuously synchronized to prevent systemic instability.
Custody, Public Offerings, Regulatory Sandbox, Security Status, Tokenization, Trading
Institutional authority and governance must remain verifiable and portable across technologies, networks, and asset classes, ensuring that legal responsibilities, approvals, and compliance persist regardless of changes in providers or execution environments.
Jurisdictional requirements are composable: recognized authorities determine which laws apply and whether requirements are satisfied, enabling cross-border regulatory sovereignty without forcing all regimes into a single asset contract or platform.
Regulatory sandboxes and technology-neutral infrastructure allow jurisdictions to test and enforce institutional control paths, supporting safer custody, compliance, and market structures while maintaining explicit, traceable legal authority and evidence.
Crypto ETPs, Custody, Public Offerings, Security Status, Tokenization, Trading
Tokenized securities in the U.S. are subject to existing securities laws, with the SEC distinguishing between issuer-sponsored and third-party models; the legal architecture and master record are central to regulatory analysis.
Regulatory frameworks (SEC, CFTC, EU, UK) emphasize that digital representation does not alter the legal rights, custody, or accountability; the focus is on preserving economic substance, investor protection, and operational resilience.
Institutional tokenization is advancing through regulated production environments, with legal enforceability, custody, and authoritative records prioritized for collateral, settlement, and structured finance instruments.
Immediate and transparent asset restitution: The submission formally requests the absolute return of all assets held in receivership to verified legal owners, without bureaucratic delay.
Rigorous fiduciary accountability and anti-fraud safeguards: Regulatory authorities must enforce strict validation frameworks and transparent accounting to prevent fraud, unauthorized asset commingling, and exploitation during asset recovery.
Regulatory harmonization and oversight: Clear, consistent guidelines are required for digital asset platforms and traditional financial intermediaries, with uncompromised internal controls, public accessibility of audits, and independent oversight to protect both digital asset markets and public infrastructure.
The SEC and CFTC have jointly clarified the regulatory treatment of tokenized securities, establishing a taxonomy and coordination across agency lines for compliant onchain markets.
Staff guidance and no-action letters have modernized custody rules, allowing broker-dealers and transfer agents to use blockchain as official master securityholder files, and permitting state trust companies to custody crypto for regulated funds.
The SEC is reviewing a proposed “Crypto Assets” rule and considering an innovation exemption for automated market makers and tokenized securities, with temporary relief to enable compliant trading while durable rules are developed.
Custody, Public Offerings, Security Status, Tokenization, Trading
Regulatory leadership is required to ensure interoperability and neutral treatment between issuer-sponsored tokens (ISTs), Direct Registration System (DRS) holdings, and DTC-issued entitlement tokens, so all forms of book-entry ownership are treated equivalently as far as legally and operationally feasible.
The SEC should promote enhancements to DTC systems and processes to remove friction and establish efficient, timely movement of securities between DTC custodial positions and directly registered book-entry positions, supporting investor protection and market fairness.
The Commission is urged to facilitate collaboration between DTC and transfer agents to future-proof system upgrades, ensuring effective integration and interoperability of tokenized securities within traditional and digital market infrastructure, thereby minimizing liquidity fragmentation and operational barriers.
