May 9, 2025

By electronic submission

Commissioner Hester M. Peirce and Members of the SEC Crypto Task Force
U.S. Securities and Exchange Commission
100 F Street NE
Washington, DC 20549-0213

RE: Request for Comment on There Must Be Some Way Out of Here

To The Crypto Task Force:

The Securities Industry and Financial Markets Association¹ and its Asset Management Group² (collectively, “SIFMA”) provide this letter in response to the recent Statement by Commissioner Hester M. Peirce entitled “There Must Be Some Way Out of Here” (the “Statement”) requesting information from stakeholders on activity involving blockchain-based digital assets.³ SIFMA welcomes the efforts of the Securities and Exchange Commission (the “SEC”) to engage with all market participants interested in the ongoing development of these technologies, as well as its creation of the Crypto Task Force (the “Task Force”). SIFMA shares 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’s comments in this letter are focused on three broad topics raised in the Statement: securities status and scoping; issues related to the safekeeping of digital assets, including broker-dealer, investment adviser, and investment company custody; and areas where modernization of the regulatory framework is needed to support the development of tokenized securities markets and related derivatives markets. SIFMA and its members have spent a significant amount of time studying these issues, with the
feedback in this letter reflecting the lessons learned from a variety of industry reports, proofs of concept and real-world applications. SIFMA intends to provide additional written feedback soon on the other issues raised in the Statement and looks forward to continued engagement with the SEC and the Task Force on these important issues over the coming weeks and months. Furthermore, SIFMA recommends that the SEC broaden the scope of its analysis to also cover down-the-road implications for security-based swap markets.

I. Executive Summary

As explained throughout this letter, any new law, regulation or guidance impacting digital asset activity in the securities sector should be designed with the following core principles in mind:

• Importance of Robust Investor Protections: The same robust investor protections that have long underpinned the strength of the U.S. securities markets must be extended to digital assets market participants.
• Build on Existing Regulatory Principles: To the extent possible, the SEC should apply existing and well-understood securities regulatory principles to digital assets, rather than creating a distinct architecture for this class of assets and transactions. Given that we are still in the early stages of the development of digital asset markets, SIFMA encourages the SEC to do this primarily through the issuance of flexible, principles-based guidance following engagement with market participants, rather than through prescriptive mandates.
• Apply a Technology-Neutral Approach: Innovation and flexible risk-mitigation will be hindered if the SEC mandates specific technologies or architectures. Instead, rules, guidance and other policies should broadly be “technology neutral,” meaning that the regulatory treatment should be determined by the underlying risks of a given asset or transaction rather than the underlying technology that is used.
• Avoid Regulatory Arbitrage: Policies should follow the “same risk, same activity, same regulatory outcome” principle, ensuring that digital assets and market participants are subject to regulator outcomes that are risk appropriate and broadly equivalent to those that apply to traditional assets and market participants. With these principles as a guide, SIFMA makes the following recommendations in this letter:

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.

1. SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly 1 million employees, we advocate for legislation, regulation, and business policy, affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association. [↩]
2. SIFMA AMG brings the asset management community together to provide views on policy matters and to create industry best practices. SIFMA AMG’s members represent U.S. and multinational asset management firms whose combined global assets under management exceed $45 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds. [↩]
3. As is our convention when commenting on these topics, we refer to “digital assets” throughout this letter; however, we recognize that the term “crypto assets” is also frequently used (including in the Statement) and for purposes of this letter intend these two terms to be viewed interchangeably. [↩]