SEC Crypto Task Force Receives New Submissions on Self-Custody and DeFi Rules

• The Crypto Task Force of the SEC has received new filings on the issues of self-custody rights and DeFi regulation.
• Feedback from the representatives and the Blockchain Association helps in understanding the problems associated with the regulations.

The U.S. Securities and Exchange Commission (SEC) Crypto Task Force has received two new written submissions to its public input page, which have once again highlighted important issues in digital asset regulation, such as self-custody rights and the regulatory status of decentralised finance (DeFi).

One of the proposals, from a Louisiana resident named DK Willard, references the Louisiana HB 488 law, which protects the state’s residents’ right to control their own digital assets. The proposal states that the upcoming federal law on the structure of the crypto market should contain proper registration requirements, transparency, and robust anti-fraud and anti-manipulation provisions. The proposal warns that too wide-reaching exemptions at the federal level could permit developers or platforms to circumvent investor protections.

The second observation is from the Blockchain Association Trading Firm Working Group, which urges the SEC to issue guidance on whether firms engaging in tokenized equity and DeFi trading on their own behalf should or should not be considered dealers subject to registration under the Securities Exchange Act. The comment suggests that the conventional broker-dealer framework applicable in traditional markets may need to be adapted to accommodate smart contract settlement and trading without necessarily requiring dealer registration.

These comments were posted on the SEC’s “Written Input” page for the Crypto Task Force, which is intended to allow stakeholders to share their views that may help shape the federal approach to digital assets.

Context Within Ongoing Regulatory Debate 

The timing of these new filings is as Congress is in the middle of negotiations on the federal crypto market structure bill, known as the CLARITY Act, which aims to provide clarity on the regulatory framework and update investor protection regulations for digital assets. There have been debates among industry participants and regulators on matters such as stablecoin regulation, DeFi liquidity, and innovation vs. regulation.

A senior crypto advisor to the White House, Patrick Witt, has urged a compromise in order to move the CLARITY Act in a period of time in which the Republican Party controls both the House of Representatives and the Senate, and in which the Trump administration is still in power. Industry leaders, such as Coinbase CEO Brian Armstrong, have been part of the process.

The recent filings with the SEC Crypto Task Force indicate the ongoing interest of the industry in federal regulation of digital assets, in particular with respect to self-custody rights and the nature of DeFi trading activity. As federal legislative development progresses and various parties make their voices heard, these perspectives may inform how regulatory frameworks balance investor protection and innovation.

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