In another big win for the crypto industry, the Securities and Exchange Commission (SEC), Division of Markets and Trading, has issued a statement today indicating that certain software user interfaces used to trade crypto do not need to register as broker-dealers.
The SEC, under the leadership of Chairman Paul Atkins, has steadfastly guided the regulator toward digital asset innovation. This is in contrast to the previous Biden Administration, which decided that all crypto and digital asset innovation was bad, effectively operating in denial of Fintech change.
The Division explained that the Exchange Act generally defines a “broker” to mean “any person engaged in the business of effecting transactions in securities for the account of others.”
The Division stated that a Covered User Interface Provider, as outlined, will not need to register as a broker-dealer.
Effectively, this means that sites or apps that connect to DeFi protocols or self-custody wallets will get a pass for registration as a broker. These interfaces must operate in a limited, non-discretionary, non-intermediary way.
- negotiating terms for any transaction;
- soliciting specific crypto asset securities transactions;
- making investment recommendations or providing advice;
- arranging for financing;
- processing trade documentation;
- conducting independent asset valuations;
- holding, having access to, handling, managing, or possessing user funds, securities, or stablecoins;
- executing or settling transactions; or
- taking or routing orders.
The SEC is pursuing the most significant updates to the securities and investing ecosystem in almost 100 years, with global impact.
The Division is accepting comments on the statement. The document is viewable here.
