SEC Proposes Certain Crypto Interfaces Don’t Need to Register as Brokers

The US Securities and Exchange Commission (SEC) has issued a staff statement clarifying how the agency plans to interpret software interfaces facilitating crypto transactions in its broker-dealer regulations.

In a Monday statement, the SEC’s Division of Trading and Markets staff said that under certain circumstances, interfaces that “assist users engaging in user-initiated crypto asset securities transactions on blockchain protocols […] utilizing the user’s self-custodial wallet” may not necessarily be required to register as a broker-dealer with the agency.

The SEC statement specified that self-custodial wallets with such user interfaces may be exempt from registration requirements, provided they do not “solicit investors to engage in any specific crypto asset securities transactions,” provide commentary on “any potential execution [routes] displayed to a user,” and other circumstances.

Although the staff statement does not carry the same weight as a proposed SEC rule subject to public comment and review, it was intended to “provide greater clarity on the application of the federal securities laws to activities involving crypto asset securities.”

It follows several others that the SEC has issued following the inauguration of US President Donald Trump in January 2025, leading to new leadership at the agency in what many have seen as friendlier to the crypto industry.

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“While the staff expressing its view is helpful, I favor a more permanent regulatory approach that addresses the broker definition in light of current market circumstances,” said SEC Commissioner Hester Peirce, adding:

“Crypto is forcing the Commission to confront its inner demons that have driven it toward ever more expansive readings of the securities laws.”

SEC leadership is still entirely Republican and understaffed

Although Trump announced several new nominations for various federal positions on Monday after a month of silence on the matter, no additional picks for the SEC or Commodity Futures Trading Commission (CFTC) were among the president’s names. Both financial regulators responsible for overseeing crypto regulation in the country face a dearth of leadership amid resignations and lack of nominations from the White House.

At the SEC, only three Republican commissioners out of five remain, while only CFTC Chair Michael Selig, also a Republican, serves at the commodities regulator following the departure of Caroline Pham in December.

Some lawmakers have proposed attaching a provision to a market structure bill under consideration in the Senate to require a minimum level of staffing at the SEC and CFTC before the legislation can take effect.

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