New Proposal Seeks to Exempt DeFi and NFT Apps from SEC Broker Rules, Impacting 3,340 Firms

Andreessen Horowitz (a16z crypto) and the DeFi Education Fund have formally proposed a "safe harbor" to the U.S. Securities and Exchange Commission (SEC). The joint proposal, submitted this week to SEC Commissioner Hester Peirce, aims to exempt decentralized finance (DeFi) applications and non-fungible token (NFT) platforms from existing broker-dealer registration requirements. This initiative is deemed crucial for the continued development of tokenized securities trading on blockchain networks. The groups argue that clear protections are vital for developers as financial markets increasingly utilize onchain infrastructure.

The proposal seeks to address significant regulatory uncertainty that has impacted blockchain innovation in the United States. Miles Jennings, Head of Policy and General Counsel at a16z crypto, emphasized the urgency, stating in a social media post, > "Markets are moving onchain - but developers need clear protections." This initiative aligns with recent efforts from the Trump administration's Working Group on Digital Assets and SEC Chair Paul Atkins, who directed staff to "update antiquated agency rules and regulations" for digital assets.

To qualify for the proposed safe harbor, applications must meet stringent criteria. These include being non-custodial, not exercising discretion over user transactions, and refraining from active solicitation or providing investment recommendations. Furthermore, the underlying protocols must be decentralized or demonstrate a good-faith intention to decentralize, ensuring they do not introduce traditional intermediary risks.

The exemption could significantly impact the regulatory landscape for approximately 3,340 SEC-registered broker-dealers managing $6.4 trillion in assets. The proposal highlights that previous SEC actions, such as those against Coinbase Wallet, Uniswap Labs, and OpenSea—later dismissed or dropped—underscored the need for clearer guidelines. Amanda Tuminelli, Executive Director of the DeFi Education Fund, underscored this need, stating, > "Developers deserve clarity, and our hope in submitting this proposal is to provide front end developers with guidelines enabling them to build without fear of being scoped into unreasonable requirements that are misaligned with the realities of the technology."

The proponents argue that requiring broker registration for neutral software applications undermines the core benefits of blockchain technology, such as disintermediation and reduced costs. This safe harbor aims to foster responsible innovation by preventing the reintroduction of centralized intermediaries where they are not functionally necessary. The initiative aligns with broader efforts to position the U.S. as a leader in the digital asset space.