Andreessen Horowitz (a16z) and the advocacy group DeFi Education Fund have requested the US Securities and Exchange Commission (SEC) to arrange a secure harbor program for non-fungible token (NFT) and decentralized finance (DeFi) purposes from the company’s broker-dealer registration necessities.
In a Wednesday letter to SEC Commissioner and Crypto Task Force head Hester Peirce, a16z and the DeFi group stated they had been following up on US President Donald Trump’s Working Group on Digital Assets name to “present aid for sure DeFi service suppliers from the broker-dealer […], trade […], and clearing company […] registration provisions of the Exchange Act.”
In July, SEC Chair Paul Atkins additionally stated he had directed the company’s workers to “replace antiquated company guidelines and laws” regarding sure crypto and blockchain purposes.
A secure harbor, by way of SEC laws, would enable many firms providing crypto-related services and products to keep away from enforcement actions. The fee and particular person buyers have beforehand filed civil lawsuits towards cryptocurrency firms for working as unregistered sellers, together with Cumberland DRW, Coinbase and Kraken.
Related: SEC Commissioner says ‘secure harbor’ legal guidelines would’ve made ICO issues worse
“The tenet of the secure harbor is that solely these Apps which don’t engender the dangers that the Exchange Act’s broker-dealer regulatory regime was designed to deal with must be eligible; in such circumstances, registration as a dealer underneath the Exchange Act is unwarranted and inappropriate,” stated the letter to the SEC, including:
“A secure harbor would offer much-needed regulatory readability, protect the Commission’s authority to supervise high-risk actions, and be sure that builders can construct within the United States with out concern 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 secure harbor on the company. The firm additionally stated in a separate letter that the fee “might take the next steps” of establishing secure harbors for airdrops and community tokens.
Which firms may very well be impacted by the “secure 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 pattern of “trade consolidation, with a declining fraction of market contributors accountable for a bigger asset pool.”
The fee established the class of Special Purpose Broker-Dealers (SPBD) in December 2020 for custodying digital asset securities. However, the SEC clarified in May that the SPBD designation was not necessary for “broker-dealers in search of to custody buyer crypto belongings which are securities,” including that customary necessities would apply for each partaking in digital asset and conventional securities.
How the SEC and Commodity Futures Trading Commission (CFTC) deal with digital belongings might change as soon as lawmakers within the US Congress handle proposed laws to ascertain a crypto market construction. The main invoice for market construction, known as the CLARITY Act, was handed by the House of Representatives in July and awaits consideration within the Senate.
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