Andreessen Horowitz (a16z) and the advocacy group DeFi Schooling Fund have requested the US Securities and Trade Fee (SEC) to arrange a protected harbor program for non-fungible token (NFT) and decentralized finance (DeFi) functions from the company’s broker-dealer registration necessities.
In a Wednesday letter to SEC Commissioner and Crypto Job Power head Hester Peirce, a16z and the DeFi group mentioned they have been following up on US President Donald Trump’s Working Group on Digital Belongings name to “present aid for sure DeFi service suppliers from the broker-dealer […], trade […], and clearing company […] registration provisions of the Trade Act.”
In July, SEC Chair Paul Atkins additionally mentioned he had directed the company’s employees to “replace antiquated company guidelines and laws” regarding sure crypto and blockchain functions.
A protected harbor, by way of SEC laws, would permit many corporations providing crypto-related services to keep away from enforcement actions. The fee and particular person buyers have beforehand filed civil lawsuits towards cryptocurrency corporations for working as unregistered sellers, together with Cumberland DRW, Coinbase and Kraken.
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“The guideline of the protected harbor is that solely these Apps which don’t engender the dangers that the Trade Act’s broker-dealer regulatory regime was designed to handle must be eligible; in such circumstances, registration as a dealer underneath the Trade Act is unwarranted and inappropriate,” mentioned the letter to the SEC, including:
“A protected harbor would offer much-needed regulatory readability, protect the Fee’s authority to supervise high-risk actions, and be sure that builders can construct in the USA with out worry of the misapplication of authorized classes inappropriate for contemporary software program infrastructure.”
The proposed change in SEC coverage adopted a16z sending a letter in March to Peirce, detailing suggestions for an NFT protected harbor on the company. The corporate additionally mentioned in a separate letter that the fee “might take the next steps” of organising protected harbors for airdrops and community tokens.
Which corporations could possibly be impacted by the “protected harbor” proposal?
In June, the SEC reported that about 3,340 broker-dealers with $6.4 trillion in belongings had registered with the company as of 2024. The company famous on the time that there had been a development of “trade consolidation, with a declining fraction of market individuals accountable for a bigger asset pool.”
The fee established the class of Particular Goal Dealer-Sellers (SPBD) in December 2020 for custodying digital asset securities. Nevertheless, the SEC clarified in Might that the SPBD designation was not necessary for “broker-dealers in search of to custody buyer crypto belongings which are securities,” including that normal necessities would apply for each partaking in digital asset and conventional securities.
How the SEC and Commodity Futures Buying and selling Fee (CFTC) deal with digital belongings might change as soon as lawmakers within the US Congress deal with proposed laws to ascertain a crypto market construction. The main invoice for market construction, referred to as the CLARITY Act, was handed by the Home of Representatives in July and awaits consideration within the Senate.
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