SEC Defines Rules for DeFi Apps to Operate Without Registration

• SEC allows DeFi front-ends to operate without registration as exchanges.
• Neutral interfaces avoid scrutiny with mandatory disclosures.
• Reg Crypto moves forward with exemptions for cryptocurrency startups.

The SEC's Division of Trading and Markets established The conditions under which cryptocurrency trading interfaces — such as DeFi front-ends, wallet applications, and aggregators — can operate without needing to register as securities brokers.

Under U.S. law, entities that facilitate securities transactions are subject to mandatory registration with the regulator. However, in a statement released on April 13, the SEC staff indicated that it will not recommend enforcement measures against certain unregistered providers, provided they meet specific criteria.

In practice, this is a conditional no-objection framework, valid for five years, aimed at so-called "Covered User Interface Providers".

To comply with the guidelines, these providers must act as neutral tools, without influencing negotiations or offering investment advice. When the interface presents multiple options for executing a transaction, the ranking must follow objective criteria—such as price or speed—and not subjective statements like "best option."

The fees charged must also be transparent and uniform, without variation depending on the asset or route selected. If the provider has a link with any trading platform, this relationship must be clearly disclosed to the user.

The statement further details extensive disclosure obligations: unregistered status, fee structure, conflicts of interest, system operation, cybersecurity protocols, and interface limitations must be communicated transparently.

Activities such as order execution, asset management, investment consulting, and transaction intermediation, which characterize the role of a broker, are excluded from this framework.

Although the document is not legally binding, it signals the regulatory team's stance on oversight and serves as provisional guidance until more comprehensive rules are defined.

Meanwhile, the SEC, led by Chairman Paul Atkins, is working on a proposed regulation known as "Reg Crypto," currently under review by the OIRA. The initiative envisions exemptions for early-stage cryptocurrency startups, token-based financing mechanisms under the 1933 Act, and the creation of a safe haven when tokens cease to be classified as securities.

This move is part of a broader regulatory modernization effort in the United States, with coordination between the SEC and the CFTC to align cryptocurrency market oversight across federal agencies.