Comment Text:
Mr. Chairman and Commissioners:
Interest of the Commenter
FreshCredit.org is a nonprofit organization that stewards open specifications and conformance testing for decentralized verification of identity, credit, and financial data. FreshCredit.org is legally separate from FreshCredit Inc. FreshCredit.org does not issue or promote tokens and does not provide trading or custody services. This comment is intended to assist the Commission as it evaluates when and how tokenized collateral and stablecoins should be recognized within regulated market workflows.
Plain-Language Explanation
"Tokenized collateral" means recording ownership of cash or other assets on a secure ledger so the asset can be pledged and settled more quickly. A "stablecoin" is a digital token designed to track a currency such as the U.S. dollar, typically supported by reserves. These tools can improve speed and transparency if proper controls are in place. Without clear controls, they can create new operational, custody, valuation, and concentration risks.
Why This Matters for the Public
Transparency: Verifiable audit trails and reserve attestations reduce hidden losses and allow supervisors to act sooner.
Containment: Failure isolation prevents one platform's outage from freezing balances or payments elsewhere.
Choice: Interoperability limits single-vendor dependence and lowers switching costs.
Change control: Testable governance ensures upgrades are documented, reviewed, and reversible if needed.
Proving ground: Pilot standards find defects in testing rather than in production.
Redemption: Clear reserve and redemption rules make conversion to dollars predictable.
Ongoing oversight: Continuous supervision closes the gap between software changes and regulatory awareness.
Recommendations
Auditability and failure isolation as conditions of recognition.
Recognition should require verifiable, tamper-evident audit trails and documented mechanisms that prevent a failure in one domain from propagating to others.
Interoperability without single-vendor dependencies.
Recognized systems should operate across ledgers without reliance on proprietary bridges, opaque intermediaries, or single-vendor custody paths.
Governance as a testable control.
Applicants should demonstrate structured, public, and testable governance: published and versioned standards, transparent upgrade procedures, recorded decisions, and independent conformance testing.
Standards for Commission-led pilots.
Pilots should require chain-agnostic design, fair-reasonable-non-discriminatory licensing for essential technology, defined incident reporting, and participation by nonprofit standards bodies as formal stakeholders. Pilots should generate artifacts suitable for examination, including test plans, pass-fail results, and remediation logs.
Stablecoin reserve and redemption controls.
For any stablecoin used as collateral or settlement cash, require periodic third-party attestations, clear redemption mechanics, concentration limits on reserve assets, and disclosure of material counterparties. Continued recognition should be conditioned on continued compliance.
Ongoing supervision rather than one-time certification.
Authorization should include obligations for continuous monitoring, periodic re-testing, and prompt notification to supervisors for material changes in code, governance, reserve practices, or risk controls.
Rationale
These measures align with the Commission's objectives of market integrity, operational resilience, and fair competition. Auditability and failure isolation support timely oversight and incident containment. Interoperability reduces concentration risk and facilitates orderly substitution under stress. Testable governance makes compliance observable. Pilot standards surface issues before scale. Reserve and redemption controls address the specific risks of stablecoins. Continuous supervision recognizes that software and counterparties change over time.
Conclusion
FreshCredit.org's role is to maintain open specifications and conformance testing so market infrastructure remains transparent and neutral. FreshCredit.org appreciates the Commission's consideration and is available for technical briefings or review of conformance criteria.
Respectfully submitted,
Ike Theodore Umunnah, J.D., Ed.M.
Chairman, FreshCredit.org
Ike Theodore Umunnah, J.D., Ed.M
www.linkedIn.com/in/ikeumunnah
