SEC Says Some Crypto Interfaces Don’t Need Broker Status

Self-Custody Interfaces in Focus

According to the staff statement, interfaces that enable users to execute transactions using self-custodial wallets may, in some cases, fall outside the scope of broker-dealer registration requirements.

This applies particularly where the interface simply facilitates user-initiated transactions without actively guiding or influencing trading decisions. For example, platforms that do not solicit users to engage in specific transactions or provide recommendations on execution routes may qualify for exemption under certain conditions.

The guidance aims to clarify how securities laws apply in scenarios where users retain control over their assets through self-custody, rather than relying on intermediaries.

The move reflects ongoing efforts by the SEC to address how traditional financial regulations apply to decentralized technologies and blockchain-based systems.

Calls for a More Permanent Framework

Hester Peirce, who leads the agency’s crypto-focused task force, welcomed the guidance but emphasized the need for a more durable regulatory approach.

Peirce noted that while staff interpretations are helpful, a more permanent framework would be needed to clearly define how broker-dealer rules apply to crypto markets in the long term. She also suggested that the rise of digital assets is challenging regulators to reconsider how broadly securities laws should be interpreted.

Regulatory Transition Underway

The latest statement comes amid a broader shift in the U.S. regulatory approach to crypto following changes in leadership earlier this year. Since the start of the current administration, the SEC has issued several clarifications aimed at providing more direction to the industry.

At the same time, both the SEC and the Commodity Futures Trading Commission are operating with limited leadership, following recent departures and delays in new appointments.

Some lawmakers are now considering measures to ensure minimum staffing levels at key financial regulators before advancing broader crypto legislation.

Balancing Innovation and Oversight

The SEC’s latest guidance highlights the ongoing challenge of balancing innovation with regulatory oversight. By signaling that certain crypto interfaces may not require registration, the agency appears to be acknowledging the unique structure of decentralized systems while maintaining a focus on investor protection.