SEC’s Newly Established Crypto Task Force: An Ambitious Agenda to Fill in the Gaps

The Securities and Exchange Commission (SEC) has been moving quickly to change course on its approach to regulating digital assets. Even before President Trump issued executive order 14178, titled “Strengthening American Leadership in Digital Financial Technology,” requiring the SEC, as part of a new working group on digital asset markets, to identify and potentially modify or rescind all regulations, guidance, and documents affecting the digital asset sector, Acting SEC Chair Mark Uyeda announced the formation of a new Crypto Task Force, led by Commissioner Hester Peirce. According to the announcement, the task force aims to create a “sensible regulatory path [for digital assets] that respects the bounds of the law” and to “draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.”

The task force is already at work. Commissioner Peirce has issued two separate statements as head of the new task force, one on February 4, 2025, and one more recently on February 21, 2025. In her first statement, Commissioner Peirce noted the legal imprecision and commercial impracticality of how the SEC had handled issues related to crypto assets and highlighted the intent of the task force to create a regulatory framework that both protects investors and preserves the industry’s ability to offer products and services. The focus of these statements, however, was on highlighting some of the current and future projects and issues for the task force and, in this regard, Commissioner Peirce has noted that the task force will be looking for input from all interested parties. 

Task Force Agenda

Among others, these projects and issues include the following:

• Seeking a “predictable, legally precise and economically rational” approach to determining the security status of crypto assets, including possibly addressing technology functions inherent to the operation of a blockchain network and the status of liquid staking tokens.
• Identifying categories of crypto assets and transactions that should logically fall outside the SEC’s jurisdiction, which could possibly include stablecoins, non-fungible tokens (NFTs) and wrapped tokens, using a methodology that is “technology-neutral.”
• Exploring viable approaches to update disclosure requirements for crypto asset offerings to address cost and feasibility concerns, such as potentially revising Regulation A or creating new forms of targeted relief.
• Considering a potential time-limited safe harbor, possibly similar to one Commissioner Peirce proposed in 2021, allowing transactions in crypto assets as part of a development of a blockchain network project to proceed without being considered securities transactions. This safe harbor could continue depending on whether the network becomes sufficiently functional or decentralized.
• As part of considering such a safe harbor, exploring whether there could be objective, technology-neutral criteria for determining what constitutes decentralization, such as thresholds for ownership and control, as well as exploring what disclosures might be warranted to protect purchasers of these crypto assets.
• Looking at whether a separate registration regime should be created for platforms trading crypto assets that are securities, including how increased interoperability among platforms with different protocols and non-security crypto assets can be accommodated.
• Exploring what crypto market data would be needed to monitor trading, both on centralized exchanges and public blockchains, and examining possible approaches to analyze that data.
• Considering other complexities related to crypto market trading, such as the difficulties brokers and dealers in these markets have in satisfying best execution obligations, and assessing how market order arrangements by participants seeking “maximum extractable value” affect the operation of crypto markets.
• As to custody generally, looking at how the differences between permissionless blockchains and tokenized permissioned assets affect the ability to satisfy custody requirements, and determining what new rules or rule amendments would be appropriate, such as those relating to the verification and valuation of crypto assets.
• As to broker-dealer custody of crypto assets, exploring whether to expand the safe harbor, now set to expire next year, for certain broker-dealers exclusively transacting in crypto assets with respect to their potential custody of those assets, as well as exploring how crypto assets should be evaluated under the net capital rule and the extent to which crypto asset record-keeping rules should be modified.
• As to activities by and obligations of registered investment advisers (RIAs), identifying issues RIAs face in satisfying best execution, record-keeping, and Form ADV or Form PF disclosure requirements, understanding the extent to which actions taken by RIAs such as staking or voting crypto assets would require removing those assets from a qualified custodian, and considering custody rules for hot and cold crypto asset storage.
• As to custody requirements imposed on registered investment companies, exploring what challenges certain activities taken with respect to crypto assets (e.g., trading, staking, or voting these assets) pose to compliance with applicable custody rules as well as exploring the extent to which these activities place a fund’s crypto assets at risk.
• Examining the extent to which crypto asset lending differs from securities lending and what regulatory issues might arise that could unduly stifle that activity.
• Exploring the extent to which size and liquidity of a market for crypto assets underlying an exchange-traded product (ETP) could address the potential for fraud in the absence of a surveillance sharing agreement with the exchange on which the ETP is traded and what factors would be appropriate in determining the size and liquidity of that market, such as the quality of pricing information for those underlying assets.
• Understanding whether and how the existence of exchange-traded funds (ETFs) registered under the Investment Company Act that invest in certain crypto assets affects the SEC’s consideration of ETPs investing in those assets.
• Exploring what securities laws and regulations, as well as other federal or state laws, hinder the tokenization of securities and what risks can be incurred in modifying regulations to facilitate this innovation, including tokenized securities intended to maintain a stable value.
• Examining whether transfer agent rules hinder the use of blockchain-based technologies, such as smart contracts, for tokenized security transactions, and whether there are any impediments to the use of on-chain identity records for these transactions.
• Considering the risks and benefits of instantaneous settlement offered by transactions executed and settled on the same blockchain, as well as looking at issues that might be raised with respect to tokenized securities transactions under Regulation NMS.
• Exploring the use of a digital securities “sandbox,” such as one previously proposed by Commissioner Peirce, allowing foreign domiciled firms to operate in the United States in the use of different fintech technologies subject to the regulations of their domicile, under predetermined limits, in order to both facilitate the development of those technologies and deepen regulators’ understanding of how the use of these technologies could affect investors.

Other SEC Activity

While Commissioner Peirce has laid out an ambitious agenda for the task force, the SEC itself has been also extraordinarily active in the crypto asset space. The SEC has stipulated, or reportedly agreed to stipulate, to the dismissal of lawsuits against— as well as agreed to close investigations of — several entities participating in crypto asset transactions, including Coinbase, Gemini, Consensys, Kraken, OpenSea, Robinhood and Uniswap, with presumably more such actions coming. It also has replaced its Crypto Asset and Cyber Unit with a new group called the “Cyber and Emerging Technologies Unit,” which will be focused on fraud. With that focus, the unit will be staffed by 30 professionals, down from the 50 staffing the previous Crypto Asset and Cyber Unit.

In addition, on January 23, 2025, SEC staff issued new interpretive accounting guidance, under which entities safeguarding digital assets that determine that a risk of loss exists arising from their obligation to safeguard those assets no longer need to report the market value of those assets as a liability but can now rely on existing accounting principles for loss contingencies to determine the amount that should be reported as a liability. Further, on February 27, 2025, SEC staff issued a statement expressing its view that “meme coins” are not securities, notwithstanding their tendency to experience significant market price volatility. The staff based this view on the grounds that meme coins generate no rights to future income, profits, or assets and transactions in the coins are not undertaken with a reasonable expectation of profits to be derived from the entrepreneurial efforts of others. This statement was not issued, however, without comment from the lone Democratic Commissioner Caroline Crenshaw, who questioned the staff’s conclusion regarding the absence of profit expectations based on the efforts of others, stating that promoters “commonly structure offerings … by limiting supply or ensuring scarcity.”

Separately, potentially heralding a change to an approach taken by the SEC with respect to staking when approving Grayscale’s spot Ethereum ETF ability to trade on the NYSE Arca exchange in 2023, where the ability of that ETF to stake ether held by the fund was not included, last week the SEC published a notice of an application filed February 14, 2025, by the exchange on which the ETF’s shares are listed to permit staking of ether held by the fund. It should be noted that all this activity comes amid a letter to the SEC from both Republican and Democratic senators asking the SEC to consider allowing protocol staking of certain assets held by digital assets ETPs, as well as an announcement Friday by White House “AI and Crypto Czar” David Sacks of President Trump’s intent to hold a crypto “summit” at the White House on March 7.

Conclusion

In sum, this new tack being taken by the SEC, including the task force agenda announced by Commissioner Peirce, could hardly represent a more dramatic — and ambitious — reversal of course from the approach taken during the previous SEC chair’s tenure. Under former Chair Gary Gensler, the SEC offered little policy guidance for participants in the crypto asset industry, relying instead on an active enforcement division to pursue individual matters. And, if Commissioner Crenshaw’s statement following the SEC staff expressing its views on meme coins is any indication, this new tack will not be free of controversy.

Although it remains to be seen how these changes and the further changes that are certain to come will unfold over the coming months, Carlton Fields will be actively monitoring the task force’s work for further developments.

This article was co-authored by Carlton Fields law clerk Jason Berkun.