New Pro-DeFi Policies Show the SEC Isn't Waiting for Congress to Act on Crypto

In brief

• The SEC issued a new policy letting certain DeFi interfaces avoid broker-dealer registration.
• The move was praised by industry leaders as a major victory for decentralized finance.
• It indicates the SEC is barreling forward on crypto even as the Senate's Clarity Act remains in limbo.

The SEC unveiled a new policy Monday exempting certain decentralized finance interfaces from key registration requirements—a proactive move that indicates the regulator is moving full-steam ahead on its crypto agenda, with or without Congress.

The new policy, laid out today in an SEC staff statement, allows user interfaces for DeFi tools to forego registration as broker-dealers, so long as they meet certain requirements. User interfaces, as defined by the SEC, are services, created by crypto companies, that make it easier for self-custodial wallet holders to complete on-chain transactions.

Prior to President Donald Trump’s return to power, the SEC viewed such interfaces as squarely under the agency’s purview, given they technically involved a crypto company playing some role in connecting independent DeFi users to a marketplace. Crypto industry leaders have long argued such interfaces should not be considered akin to hands-on, traditional Wall Street brokers like Charles Schwab.

Now, crypto leaders have appeared to have gotten their wish. Should a user interface adhere to a list of requirements, the SEC has said it will not obligate the companies behind those interfaces to register with the agency—even when the interfaces engage with securities.

To qualify, an interface must not handle or hold user funds; arrange financing; solicit users to engage in any specific crypto transactions; or pressure users to choose one transaction path over another. It must also give users multiple options for executing transactions and list the options by objective criteria such as price, and charge users only flat rates or fixed rates for assisting with transactions, among other requirements.

"Crypto is forcing the Commission to confront its inner demons that have driven it toward ever more expansive readings of the securities laws," SEC commissioner Hester Peirce, a noted crypto advocate, said Monday of the staff statement. "Recent history is littered with a patchwork of no-action letters and enforcement actions that have contorted the term 'broker' beyond recognition."

Decentralized finance leaders hailed the announcement as a major step forward for the sector.