The US Securities and Exchange Commission’s Crypto Task Force published two new submissions to its “Written Input” page on Jan. 20, addressing self-custody rights and the regulation of proprietary trading in tokenized and decentralized finance (DeFi) markets.
One submission was filed by “DK Willard,” focusing on retail crypto users in Louisiana, while the other came from the Blockchain Association’s Trading Firm Working Group and examines dealer registration rules for tokenized equity markets.
The Louisiana-focused submission references state law HB 488, which affirms residents’ right to self-custody digital assets, and argues that forthcoming federal crypto market structure legislation should maintain strong registration, transparency, and anti-fraud and anti-manipulation standards. It cautions that exemptions included in some federal proposals could allow developers and platforms to sidestep core investor protection requirements, potentially increasing fraud and financial crime risks for consumers.
Meanwhile, the Blockchain Association urged the SEC to clarify that firms trading tokenized equities or DeFi assets solely for their own account — without soliciting customers, holding custody, or executing trades on behalf of others — should not automatically be classified as “dealers” subject to registration under the Exchange Act.
It also notes that existing broker-dealer regulations were built for traditional financial markets and may require modification to accommodate smart contract–based settlement systems.
CLARITY compromises and industry response
The submissions come as negotiations continue in Congress over the federal crypto market structure bill, known as CLARITY.
Senior White House crypto adviser Patrick Witt has urged the industry to accept trade-offs to ensure the legislation passes while Republicans still hold control of Congress and the Trump administration remains in office. He emphasized that lawmakers and industry participants are attempting to strike a balance between issues such as stablecoin yield, DeFi liquidity and investor protection within the bill’s language.
Speaking from Davos on Wednesday, Coinbase CEO Brian Armstrong acknowledged the progress made in advancing CLARITY and said:
“We’re all working together to find a win-win scenario for everyone, especially the American people.”
