The US SEC’s Division of Trading and Markets has outlined conditions under which crypto asset trading interfaces such as DeFi front-ends, wallet apps, or crypto aggregators can operate without registering as brokers.
Under US securities law, entities that facilitate or arrange securities transactions may be required to register as broker-dealers with the SEC.
However, in a statement issued on April 13, SEC staff indicated that, subject to specified conditions, they would not recommend enforcement action against certain providers operating without registration. That effectively offers a time-limited, conditional staff no-objection framework for firms that adhere to defined requirements.
When can crypto apps avoid broker dealer registration under SEC guidance?
Under guidance from SEC staff, “Covered User Interface Providers” may avoid broker-dealer registration when they function purely as neutral tools rather than intermediaries.
Providers cannot push specific trades or give investment advice. If the interface shows multiple ways to execute a trade, it must use objective sorting (like price or speed), not subjective claims like “best option.”
In addition, fees must be straightforward and consistent, not influenced by which assets or routes are chosen. If the provider is affiliated with a trading venue, that relationship must clearly be disclosed and treated fairly.
The framework also imposes extensive disclosure obligations. Providers must clearly communicate their non-registered status, fee structures, conflicts of interest, system mechanics, cybersecurity controls, and limitations of the interface.
The statement explicitly carves out activities that would trigger broker status, such as executing trades, handling assets, providing advice, or negotiating transactions.
While not legally binding, the statement signals staff’s enforcement posture and provides interim guidance pending more comprehensive regulatory action. It will sunset after five years unless superseded.
SEC advances Reg Crypto framework for token fundraising and DeFi rules
The SEC, led by Chair Paul Atkins, is advancing a proposed “Reg Crypto” framework now under review by OIRA. It would introduce exemptions for early-stage crypto startups, structured token fundraising under the 1933 Act, and safe harbor signaling when tokens transition out of securities status.
The new framework is tied to ongoing efforts to modernize US crypto regulation and align oversight across agencies, including coordination with the CFTC.