SEC narrows when DeFi tools are brokers
The SEC’s Division of Trading and Markets issued guidance saying some software that enables crypto-wallet transactions may not meet the agency’s broker definition. The staff statement draws a line between pure protocol/software rails and business models that exercise discretionary intermediation. ( )
The Securities and Exchange Commission staff said on April 13 that some crypto trading apps and wallet tools do not have to register as brokers if they stay as neutral software. (sec.gov) The statement came from the agency’s Division of Trading and Markets and applies to websites, browser extensions and mobile apps that help users prepare trades in crypto asset securities through self-custodial wallets. The staff said those tools typically turn a user’s chosen terms — asset, price and size — into blockchain-readable commands for the user to sign and send. (sec.gov) In plain terms, the staff drew a line between software rails and human or business intermediation. If a provider only helps users route their own wallet transactions, shows market data and charges a fixed percentage per trade, the staff said that alone does not make it a broker. (sec.gov) The line gets sharper when a platform starts making choices for the user. Industry coverage of the statement said the staff expects users to be able to override defaults, and said platforms cannot promote specific trades, control execution or vary fees based on the route or product. (fxstreet.com, coindesk.com) The document is not a commission rule. The staff called it an “interim step” while the agency continues to consider broader crypto securities questions, and said the statement will be withdrawn in five years unless the commission acts sooner. (sec.gov) That timing matters because the broker question has sat near the center of the Securities and Exchange Commission’s crypto fights for years. Commissioner Hester Peirce said April 13 that the law does not make a wallet or interface a broker just because it lets users control self-custody wallets, see onchain data or format messages for blockchain submission. (sec.gov) Peirce also tied the new statement to a court fight with Coinbase. Her statement cited a 2024 federal court ruling in New York that rejected arguments that a wallet service charging a 1% transaction fee was a securities broker. (sec.gov) The staff statement is also narrow by design. It covers user-initiated transactions in crypto asset securities through self-custodial wallets, not services that hold customer assets, give investment advice or manage trades for users. (sec.gov, fxstreet.com) So the agency did not give decentralized finance a blanket pass on April 13. It sketched a narrower safe lane for software that acts like plumbing, not a person in the middle. (sec.gov, coindesk.com)
