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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 framework enforces the “Contract > Code” principle, ensuring smart contracts only implement agreed legal terms and never override governing legal documentation. Judicial remedies remain fully preserved under U.S. securities law.
POLARIS aligns with existing U.S. securities laws (Securities Act of 1933, Exchange Act of 1934, Investment Company Act, Advisers Act) and incorporates AML/KYC obligations under the Bank Secrecy Act and FATF Travel Rule, embedding compliance checks into automated pre-settlement verification.
Implementation occurs under SEC oversight via conditional exemptive relief and a proposed Self-Regulatory Organization (SRO). All SRO rules require SEC approval, and the SEC retains ultimate jurisdiction, including authority to modify or terminate pilot operations.
Charles W. Mooney, Jr., New Hampshire Commission on Uniform State Laws
Custody, Public Offerings, Safe Harbor, Security Status, Tokenization, Trading
The SEC should mandate DTCC cooperation to enable near real-time movement of registered ownership between direct and intermediated holding, creating a level playing field for tokenized securities.
Infrastructure reform is necessary to remove regulatory and market barriers to direct holding and self-custody, ensuring benefits equivalent to intermediated accounts for direct holders.
The SEC should request proposals for a reformed infrastructure and clarify broker-dealer authority to execute transfers of directly held securities for trading in traditional markets.
Stuart Alderoty, Sameer Dhond, and Deborah McCrimmon, Ripple
Public Offerings, Security Status, Tokenization, Trading
SEC authority should hinge on enforceable promises and legal claims, not mere expectations of profit or passive economic interest. Without privity or contractual rights, speculation does not create securities status.
Securities regulation should apply to primary distributions where privity exists (e.g., ICOs), not to perpetual secondary-market trades. Treating every issuer sale as a capital raise creates legal fictions and operational paralysis.
Regulatory focus should target cases where an issuer or affiliated group retains unilateral control over network rules or token functionality, as this may constitute an ongoing obligation. Control must be objectively defined; mere influence or inventory holdings do not qualify.
Miller Whitehouse-Levine and Patrick Wilson, Solana Policy Institute
The SEC should adopt a technology-neutral framework that distinguishes true intermediaries (those holding funds or controlling execution) from developers of non-custodial, non-discretionary software tools.
Interpretive guidance should confirm that publishing or maintaining non-custodial software (wallets, smart contracts, passive interfaces) does not constitute operating an exchange, clearing agency, or effecting transactions for others.
The definition of “exchange” should exclude non-custodial, non-discretionary software that does not perform marketplace functions, ensuring communication layers and read-only tools remain outside regulatory scope.
SEC duties under the Exchange Act should encompass real-time transaction simulation and validation to prevent fraud before execution, given the immutability of onchain transactions.
Controls consistent with SCI objectives in digital-asset markets include pre-execution exploit detection and continuous monitoring to preserve system integrity and resiliency.
Technology-neutral application should recognize pre-signature safeguards (e.g., malicious destination detection and real-time alerts) as reasonable measures to protect customer assets where reversals are impossible.
SEC should confirm that SEC-registered transfer agents may serve as qualified custodians for tokenized securities, ensuring regulatory oversight and compliance.
Establish guidance allowing tokenization of securities in markets abandoned by traditional infrastructure under existing exemptions when using SEC-registered transfer agent custody with verifiable 1:1 backing.
Clarify that public, permissionless blockchains (e.g., Solana) may be used for tokenized securities when paired with appropriate custody arrangements, without requiring permissioned alternatives.
The SEC should apply existing statutory definitions of “exchange,” “broker,” and “dealer” to DeFi participants and assess compliance under the Securities Exchange Act of 1934.
The SEC lacks authority and policy basis to grant broad exemptive relief from these definitions, as doing so would undermine investor protections and market resiliency measures.
Instead of disapplying the regulatory framework, the SEC should conduct rule-by-rule analysis and address impediments through notice-and-comment rulemaking to preserve investor protections.
Securities Industry and Financial Markets Association (SIFMA)
Activities involving native, wrapped, or entitlement tokens qualify as securities transactions, triggering broker-dealer, exchange, and registration requirements under the Securities Act and Exchange Act.
Issuers of tokenized securities must comply with Securities Act §§ 5, 6, 7, 10, including filing registration statements and delivering prospectuses. Additional disclosures may be needed to address unique tokenization risks.
Sections 12, 13, 15, 17, and 23 of the Securities Act and §§ 9, 10, and 20 of the Exchange Act prohibit manipulative practices and impose liability for material misstatements or omissions, regardless of whether securities are tokenized.
Securities Industry and Financial Markets Association (SIFMA)
Custody, Public Offerings, Security Status, Tokenization, Trading
Across the SEC’s Investment Advisers Act, Investment Company Act, Securities Act, and Exchange Act rules, the legal and regulatory requirements generally apply equally to traditional and tokenized assets. The rules governing registration, disclosure, custody, recordkeeping, anti-fraud, and investor protection are not fundamentally altered by the use of tokenization or digital asset formats. Where tokenized assets are securities, they are subject to the same substantive regulatory regime as their non-tokenized counterparts.
For investment advisers and investment companies, custody rules (e.g., IAA Rule 206(4)-2, ICA Rules 17f-1 through 17f-7) require that client assets—including tokenized securities—be held with qualified custodians and subject to the same segregation, audit, and reporting requirements as traditional securities. Self-custody of tokenized assets by advisers is not subject to lesser requirements, and banks acting as custodians for tokenized assets must meet the same standards as for other securities.
The core disclosure, reporting, and anti-fraud provisions of the federal securities laws (including the Securities Act, Exchange Act, and related SEC rules) apply to offerings, trading, and custody of tokenized securities. This includes requirements for registration statements, prospectus delivery, periodic reporting, proxy rules, and prohibitions on manipulative or deceptive practices. The SEC’s authority and investor protections are not diminished by the use of tokenized or digital asset technology.
The proposed modernization advocates amending the Custody Rule to allow registered investment advisers (RIAs) to safeguard client crypto assets using non-qualified custodian (non-QC) solutions under a reasonableness standard, ensuring assets remain secure and fiduciary duties are met.
Introducing flexibility to permit both QC and non-QC safeguarding solutions mitigates operational frictions, reduces concentration risk, and aligns custody practices with the unique properties of crypto assets, while maintaining compliance with the Custody Rule’s core tenets.
The model framework leverages multi-signature/multi-party computation (MS/MPC) technology, contractual agreements (MPA), and operational security standards to satisfy policy objectives of segregation, safeguarding, and independent verification without mandatory third-party custody.
