The DeFi Education Fund, alongside 35 other crypto industry leaders, is urging the Securities and Exchange Commission to formalize its recent decentralized finance interface guidance into formal rulemaking.
In a letter this week sent to the SEC, crypto groups pressed the agency to conduct rulemaking after it released a statement earlier this month that clarified certain user interface providers, such as DeFi wallets, do not need to register as broker-dealers.
"Specifically, the Commission should consider adopting a principles-based framework that provides clear, objective criteria for when activity falls within the definition of “broker,” iterating on the criteria in the Statement," the groups said in the letter. "Finalizing these principles would provide the legal certainty needed to support responsible innovation while preserving the Commission’s ability to regulate the intermediaries that pose the risks that the broker-dealer regulatory regime was designed to address."
Other advocacy groups signed the letter, including Crypto Council for Innovation, the Blockchain Association, and the Solana Policy Institute. Aave Labs, Andreessen Horowitz, Uniswap Labs, and Mysten Labs, Inc. also signed on.
On April 13, the SEC's Division of Trading and Markets released a staff statement to delineate that interfaces, such as DeFi wallets, would generally not be considered a broker-dealer and said it was an "interim step while the Commission continues to consider various regulatory issues."
The SEC outlined a list of scenarios where an interface could be a broker-dealer, including if it solicits investors, makes investment recommendations, or sways routing order decisions.
The DeFi Education Fund and other groups called the SEC's statement "an important step," but warned that the guidance may not have staying power.
"As the digital asset industry knows too well, reliance on informal guidance has its own risks," they said. "It is critically important that the Commission prevent an overly expansive interpretation of the term 'broker' from existing now or being revived in five years."
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