SEC Exempts Crypto Interfaces From Broker Registration

The Securities and Exchange Commission (SEC) said Monday (April 13) that it will not object to specified providers of user interfaces for crypto asset transactions creating, offering or operating those interfaces without registering as a broker-dealer.

These interfaces include specified ones provided by a website, browser extension or other software application embedded in a wallet or separately available for download, staff of the SEC’s Division of Trading and Markets said in a Monday staff statement.

“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 statement said.

The statement is an interim step while the SEC considers regulatory issues relating to crypto assets securities activities, and the statement will be considered withdrawn effective five years from April 13, according to the statement.

SEC Commissioner Hester M. Peirce said in a statement released Monday that she commends the staff statement and that she favors a more permanent regulatory approach that addresses the definition of “broker.”

Peirce said that the term “broker” has been expanded beyond recognition by the SEC in the recent past and that this has dissuaded people from developing innovations for the securities industry.

“People have shown great ingenuity in developing crypto wallets and front ends that serve users well,” Peirce said in her statement. “It would be a shame if investors in crypto asset securities transactions were unable to use these tools because of an overly broad reading of the term ‘broker.’”

In another recent move, the SEC and the Commodity Futures Trading Commission (CFTC) issued resources March 17 that are designed to provide greater clarity about their respective rules around crypto assets.

The SEC issued an interpretation that clarifies how federal securities laws apply to certain crypto assets and transactions involving crypto assets, while the CFTC provided guidance that said it will administer the Commodity Exchange Act (CEA) consistent with the SEC’s interpretation.

SEC Chairman Paul S. Atkins said at the time in a press release that “this interpretation will provide market participants with a clear understanding of how the Commission treats crypto assets under federal securities laws.”