A broad coalition of DeFi builders and investors is pressing the U.S. Securities and Exchange Commission (SEC) to formalize its recent staff guidance on 'non-custodial user interfaces' through binding rulemaking. The DeFi Education Fund, Aave Labs, Uniswap Labs, Paradigm, Andreessen Horowitz, and the Digital Chamber have sent a joint letter urging the SEC to turn its temporary safe harbor into permanent rules.
The coalition's letter responds to the SEC Division of Trading and Markets' April 13 staff statement, which concluded that certain crypto asset front ends — specifically 'non-custodial user interfaces' that merely convert user commands into blockchain instructions — do not need to register as broker-dealers. The guidance provided a five-year no-action framework for 'Covered User Interface Providers,' allowing them to operate under 12 conditions, including strict limits on discretion and order handling. Notably, it permitted transaction-based fees if compensation is flat and objective, while banning payment for order flow.
However, the guidance is explicitly temporary and can be withdrawn by 2031 without Commission action. The coalition argues this sunset provision is insufficient for businesses making long-term infrastructure investments. In their letter, the groups urge the SEC to open a formal notice-and-comment rulemaking to codify a modern broker definition that explicitly excludes neutral software providers, validators, RPC/API operators, oracle networks, and cloud services that never take custody or exercise trading discretion.
'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 letter states. 'Such a rulemaking would support the activities of other infrastructure providers, including validators, API and RPC providers, data and communications networks, oracles, and cloud services, all of which play important roles in blockchain innovation and performance but do not engage in brokerage or dealing activities.'
The timing of the push is critical. With the CLARITY Act — the main federal crypto market-structure bill — stalled in the Senate Banking Committee amid pushback from the banking industry, industry groups view SEC rulemaking as the only near-term path to legal certainty for DeFi infrastructure in the U.S. The coalition warns that 'absent clear, technology-neutral rules, future staff or Commissions could reinterpret the broker definition in ways that chill innovation and push core U.S. infrastructure offshore.'
Under Chairman Paul Atkins, the SEC has taken a more supportive stance toward digital asset innovation compared to the prior administration, which industry participants say sought to undermine crypto development. The DeFi Education Fund, a non-profit established in 2021 through a Uniswap governance proposal, continues to advocate for regulatory clarity through research and engagement.
