The U.S. Securities and Exchange Commission said certain user interfaces that allow users to transact and use their crypto wallets may not need to register as broker-dealers if certain conditions are met.
On Monday, in their latest effort to clarify their stance on digital assets, the SEC’s Division of Trading and Markets released a staff statement on crypto user interfaces. The statement does not constitute a formal rule or guidance.
“This statement is part of an effort to provide greater clarity on the application of the federal securities laws to activities involving crypto asset securities,” the SEC said. “The Staff is providing its views as an interim step while the Commission continues to consider various regulatory issues relating to crypto asset securities activities and the feedback it has received.”
Over the past year, the agency has released several staff statements involving crypto, including saying that memecoins and most stablecoins are not securities, as well as ones focused on staking. That marks a shift from the previous administration, when former SEC Chair Gary Gensler maintained that most cryptocurrencies qualified as securities — a stance that drew criticism from the crypto industry over enforcement practices and efforts to bring firms under existing SEC rules.
In the latest statement, the SEC describes a “covered user interface” as a website, software application, or browser extension that “may be embedded in a wallet” or available to be downloaded to help users engage in “user-initiated crypto asset securities transactions on blockchain protocols (or blockchain-based smart contracts) utilizing the user’s self-custodial wallet.”
In the statement, the SEC outlines a list of circumstances where the agency “will not object to the Covered User Interface Provider creating, offering, and/or operating a Covered User Interface without registering as a broker-dealer.” Those activities include things like if a provider doesn’t solicit investors, if it doesn’t sway users on execution routes by saying phrases such as “best price,” and also if the provider has policies and procedures in place to analyze trading venues, among other areas.
The SEC also asked for comments.
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