SIFMA and SIFMA AMG Respond to SEC's Crypto RFI

Washington, D.C., May 12, 2025 – SIFMA and SIFMA Asset Management Group (SIFMA AMG) have responded to the recent Securities and Exchange Commission (SEC) Crypto Task Force's request for information from stakeholders on activity involving digital assets

In the comment letter, SIFMA and SIFMA AMG welcome the SEC's efforts to engage with all market participants interested in the ongoing development of these technologies, as well as its creation of the Crypto Task Force, and expressed their agreement with the SEC's and the Task Force's goal of providing greater clarity to market participants engaged in digital assets activities through frameworks that balance responsible innovation and protecting investors.

SIFMA and SIFMA AMG emphasize the importance of four general principles:

1. Extending existing robust investor protections to digital assets market participants,

2. The need for the SEC to apply existing and well-understood securities regulatory principles to digital assets rather than creating a distinct architecture for this class of assets and transactions,

3. The value of a technology-neutral approach, and

4. The need to ensure that digital assets and market participants are subject to regulatory outcomes that are risk appropriate and broadly equivalent to those applied to traditional assets and market participants.

More specifically, the comment letter focuses on three areas:

Securities Status

* Adopt Clear and Consistent Taxonomies: The SEC should adopt clear, consistent and consensus-driven taxonomies and classification approaches, such as those described in this letter, as a crucial first step in the development of effective digital assets regulation.

* Securities Status Should be Based on Economic Characteristics: The determination of whether a digital asset is a security should be based upon the intrinsic economic characteristics of an asset or transaction rather than through a technology-driven approach that depends on mutable factors extrinsic to the asset or transaction.

* Supplement Existing Case Law: The SEC should build on the existing corpus of case law in determining securities status, supplementing as appropriate through the issuance of flexible, principles-based guidance that considers industry input, and FAQs specific to digital assets.

* Scoping-Out: SIFMA supports the SEC's efforts to provide guidance scoping-out non-securities digital assets and digital asset activities. However, guidance should be based on a technology-neutral approach and avoid adopting classifications that may create conflicts with terminology in potential future legislation on payment stablecoins and digital assets market structure.

Custody

* Apply Traditional Custody Principles: Traditional regulatory principles around custody and the role of the custodian, including the separation of financial activities, segregation of client assets, and ensuring proper control of assets, should be applied to the custody of digital assets, whether in the broker-dealer, registered investment adviser ("RIA"), or investment company context.

* Rely on Existing Custody Frameworks and Do Not Adopt Safeguarding Proposal: The SEC should neither develop a new custody framework solely for digital assets nor proceed with its unworkable 2023 Safeguarding proposal. Instead, the SEC should ensure that existing regulatory perimeters with respect the regulation of custodial activity do not expand to include asset types beyond securities and funds, and that where clarification regarding how these regulations will apply to new technology, the SEC should engage in an iterative dialogue with industry participants to develop updated guidance on specific topics e.g., on the subject of "private keys."

* Custody Requirements Should be Technology Neutral: Custody rules and guidance should adopt flexible frameworks that accommodate evolving technologies and avoid favoring specific technological characteristics, including the network type (e.g., public versus private) and its configuration (e.g., permissioned versus permissionless).

* Replace the Special Purpose Broker-Dealer Framework: The SEC should formally withdraw the Special Purpose Broker-Dealer ("SPBD") Statement and replace it with a framework that would enable broker-dealers to custody digital asset securities in compliance with applicable regulations alongside traditional assets within their established entities.

* Custody of Non-Security Digital Assets: For digital assets that are not securities, the SEC should carefully assess its existing authorities in consultation with other regulators and avoid prescriptive mandates that may be difficult or impossible for custodians to implement. Any rules or guidance should also be technology neutral and treat the non-security digital asset in the same manner as a traditional asset with the same economic function.

Tokenization

* Targeted Clarifications Are Needed to Help Tokenized Asset Markets Develop: The SEC should make targeted policy changes to promote the development and expansion of tokenized securities markets. This includes clarifying how existing requirements apply to tokenized securities in areas such as recordkeeping, possession and control, and clearing and settlement.

* Modernize Transfer Agent Regulations for Tokenized Assets: The SEC should modernize its transfer agent regulations as they apply to tokenized asset transactions, recognizing that key features of blockchains and smart contracts can allow the transfer agent to fulfil many, if not all, of its core functions, including recordkeeping, settlement facilitation, and compliance enforcement.

* Do Not Move to T+0 or "Atomic" Settlement: Regulatory modernization to promote tokenized asset markets should not include any attempt to move the industry to a T+0 settlement cycle, given the significant risks, costs, and additional complexity it would create after the recent successful transition in the United States to T+1 settlement and the fact that other major jurisdictions have not yet completed their process of transitioning from a T+2 to a T+1 settlement cycle.

The full letter is available here. SIFMA and SIFMA AMG plan to submit additional comments on other issues raised in the request for information in the coming weeks

Source: SIFMA