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SEC Crypto Task Force Seeks Input on Future of Digital Asset Regulation

By  |  August 27, 2025
SEC Crypto Task Force Seeks Input on Future of Digital Asset Regulation

The U.S. Securities and Exchange Commission’s (SEC) newly created Crypto Task Force has launched a nationwide tour to gather perspectives from small teams and early-stage projects on how digital assets should be regulated. According to a statement, the series of roundtables will focus on balancing the anonymity of crypto transactions with the anti-money laundering (AML) safeguards central to the global financial system.

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    The task force is examining whether new regulatory frameworks built on cryptographic proofs can provide solutions. Two proposals—POLARIS 3.0 and the Modular Consent Mechanism—were submitted for review. Per a statement, these systems aim to preserve user pseudonymity while meeting requirements under securities law, the Bank Secrecy Act, and international AML standards.

    This initiative marks the most public-facing effort by the SEC’s Crypto Task Force since it was formed earlier this year after the departure of former SEC Chair Gary Gensler, who was known for his critical stance on digital assets. Under the leadership of SEC Commissioner Hester Peirce, often referred to as “Crypto Mom” for her supportive views toward the industry, the agency has signaled a shift toward collaboration rather than strict enforcement. According to a statement, the task force’s dual mission is to uphold existing law while also shaping new rules tailored to the unique features of cryptocurrencies, including decentralized finance (DeFi) and stablecoins.

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    Related: SEC Chair Promises ‘New Day’ For Crypto Assets at Blockchain Symposium

    Peirce has emphasized the importance of broad engagement. “We want to hear from people who were not able to travel for the roundtables that took place this past spring in Washington, D.C. and may not have had a voice in past policymaking efforts,” she said. She added that the task force recognizes any regulatory framework will have wide-reaching consequences and is committed to inclusive outreach.

    One of the most difficult questions for regulators remains how to determine when tokens qualify as securities. U.S. courts have traditionally applied the “Howey Test,” a Supreme Court standard that classifies investment contracts. However, applying this test to decentralized tokens, which may lack a central issuer or identifiable organization, has proven highly contentious.

    Among the proposals, POLARIS 3.0 has drawn particular attention. Described as a “technical-regulatory bridge,” it outlines a system of “identity oracles” that can verify requirements such as Know Your Customer (KYC) checks, sanctions screening, and biometric validation without revealing sensitive personal information. Instead, cryptographic proofs would confirm compliance while keeping user data private. To support its rollout, the proposal calls for a self-regulatory organization under SEC oversight that would certify smart contracts, manage identity-oracle networks, and operate a “Civic Transparency Portal” accessible to the public.

    The SEC’s outreach underscores both the technical challenges and the political stakes of digital asset regulation. The ongoing roadshow represents an effort not only to craft workable solutions but also to give grassroots participants a role in shaping the future rules of the crypto economy.

    Source: Biometric Update