A coalition of major DeFi players, led by the DeFi Education Fund and including Aave Labs, Uniswap Labs, Paradigm, and Andreessen Horowitz (a16z), has submitted a formal letter to the U.S. Securities and Exchange Commission (SEC) calling for a clear definition of “broker” that explicitly excludes non-custodial user interfaces from registration requirements.
Key Demands: Avoiding Misclassification of Neutral Infrastructure
The letter, addressed to the SEC’s Division of Trading and Markets, argues that the current broad interpretation of “broker” could mistakenly classify neutral software providers and infrastructure participants—such as validators and oracles—as brokers. The signatories emphasize that these entities do not hold user assets or facilitate transactions in a traditional brokerage capacity. “Non-custodial interfaces allow users to retain full control over their assets and should not be subject to broker registration,” the letter states. The group urges the SEC to initiate a formal rulemaking process to provide legal certainty and protect the innovation of decentralized finance.
SEC’s Previous Signals and the Stalled CLARITY Act
The SEC has previously indicated that certain DeFi trading interfaces might not need to register as brokers, signaling some policy flexibility. However, the CLARITY Act, which would address these issues more comprehensively, remains stalled in the Senate. Industry participants see this letter as a critical step to bridge the legislative gap through administrative clarity.
Market and Industry Implications
Following the news, DeFi tokens experienced minor volatility. AAVE traded down 0.11% and UNI down 3.10% at press time. Market participants remain cautious, awaiting the SEC’s response. Analysts believe that a favorable rulemaking outcome could significantly reduce legal risks for DeFi front-end developers and infrastructure providers, potentially attracting more traditional financial institutions to the DeFi ecosystem. The SEC’s Division of Trading and Markets will now review the letter, with the industry pushing for a public comment period to formalize the carve-out for non-custodial interfaces.