SEC Clears Path for DeFi Front-Ends to Operate Without Broker-Dealer Registration

TLDR:

• SEC staff said DeFi front-ends may skip broker-dealer registration if strict operational conditions are met.
• Providers must charge fixed, neutral fees and cannot accept payment for order flow from third parties.
• Covered User Interfaces must not route orders, hold user funds, or offer any investment recommendations.
• The SEC guidance takes effect April 13, 2026, and will remain valid for five years barring further action.

The SEC’s Division of Trading and Markets issued a staff statement on April 13, 2026, clarifying when certain crypto trading interfaces may operate without broker-dealer registration.

The guidance covers DeFi front-ends, wallet extensions, and mobile apps used for crypto asset securities transactions.

Providers must meet specific conditions to qualify. The statement remains effective for five years unless the Commission takes further action before then.

Conditions That Define a Covered User Interface

A Covered User Interface is software that helps users prepare transactions involving crypto asset securities. It connects to a user’s self-custodial wallet and converts transaction parameters into blockchain-readable commands. These interfaces can also display market data, such as asset prices and estimated gas fees.

The SEC staff said providers must not route orders or exercise discretion over transactions. Users must be able to customize default transaction parameters such as price slippage and gas fees. Educational material must also be available to help users set those parameters themselves.

Providers cannot solicit users into specific crypto-asset transactions. Any affiliated trading venues must be clearly disclosed to users. The interface must connect to affiliated venues on the same terms as unaffiliated ones.

When only one execution route appears, the interface must let users view additional routes. If multiple routes are shown, sorting tools based on objective factors like price or speed must be available. Providers cannot label any route as the “best” or “most reliable.”

Fee Structures and Disclosure Requirements

Compensation for Covered User Interface Providers must follow strict rules. Fees must be fixed and applied consistently across all transactions. The SEC said providers cannot accept payment for order flow or receive fees from anyone other than the user.

Providers must prominently disclose all material facts about their role and fees. This includes a clear disclaimer stating they are not registered with or regulated by the SEC. Disclosures must also cover cybersecurity policies, MEV-related risks, and any conflicts of interest.

The statement also lists activities that fall outside this guidance. Providers cannot hold user funds, execute or settle transactions, or make investment recommendations. Taking or routing orders is also excluded from the safe harbor described in the statement.

The SEC said maintaining policies, procedures, and internal records may help providers demonstrate compliance. Public comments on the statement can be submitted electronically or by mail using File Number 4-894. The staff said it welcomes input on all aspects of the guidance issued.

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