Crypto groups urge SEC to turn DeFi guidance into broker rules

On April 21, the DeFi Education Fund and more than 30 crypto organizations submitted a letter to the U.S. Securities and Exchange Commission asking the agency to convert staff guidance on decentralized finance into formal broker rules. The groups argued noncustodial transaction interfaces function as technical infrastructure rather than intermediaries that execute customer transactions.

The coalition supported the SEC staff’s distinction for certain transaction interfaces but urged the commission to pursue notice-and-comment rulemaking to codify those principles. The letter wrote, “We therefore respectfully urge the Commission to build upon the Statement through notice-and-comment rulemaking,” and called for a principles-based framework with “clear, objective criteria for when activity falls within the definition of ‘broker.'”

Signatories identified specific infrastructure components, including validators, data services and communications networks, as technical functions that should be treated differently from entities that actively intermediate trades. The letter argued that continuing uncertainty over how the term broker applies in decentralized markets could hinder innovation and limit investor access to efficient market services.

Commissioner Hester Peirce separately urged the SEC to modernize broker-dealer rules to reflect the structure of crypto markets. In recent remarks, Peirce said legacy definitions risk mislabeling software providers and infrastructure participants and called for a durable overhaul that aligns regulatory treatment with decentralized technology.

The coalition emphasized the difference between staff guidance and formal rules. The letter noted that staff statements can be changed or reinterpreted and asked the SEC to issue rules through notice-and-comment so market participants would have a clearer record of standards and an opportunity to provide input.

DeFi Education Fund organized the response and more than 30 independent organizations signed the letter. The group offered to provide additional, detailed commentary during the rulemaking process and closed by writing, “We are hopeful that formalizing the principles in the Statement into a durable, technology-neutral regulatory framework would provide lasting clarity and reinforce the approach outlined by the Staff.”

The debate over the definition of broker has grown as decentralized finance tools allow users to trade and interact without centralized custody. Industry participants say applying traditional broker-dealer obligations to software and infrastructure could impose requirements that do not fit noncustodial systems, while regulators have cited investor protection and market integrity concerns.