DEF and a16z Jointly Submit Safe Harbor Proposal to the SEC For User Interfaces

We are happy to share that on August 12, 2025, Andreeson Horowitz (“a16z”) and DeFi Education Fund (“DEF”) jointly submitted a proposal to the Securities and Exchange Commission (the “Commission”) advocating for a safe harbor from broker registration requirements under the Securities Exchange Act of 1934 for trading interfaces that enable users to interact with blockchains and smart contract protocols (Apps), including those related to decentralized financial (DeFi) protocols and NFT marketplaces. 

Importantly, our proposal aims to be flexible enough to account for the ever-evolving nature of early stage tech development and is grounded in the principle that most web-based or app-bassed trading interfaces are fundamentally non-custodial, passive software tools that allow users to interact directly with public, decentralized network and protocol infrastructure – and, therefore, should not be subject to broker-dealer registration requirements. These Apps inherently do not engender the risks that the Exchange Act’s broker-dealer regulatory regime was designed to address.

Who would be qualified for inclusion in the safe harbor? 

The proposed safe harbor would include Apps that function as technical infrastructure and allow users to engage in self-directed transactions. To qualify for the safe harbor and be exempt from broker-dealer registration, the App must:

1. Not take custody of user assets;

2. Not exercise discretion over execution of user transactions (but use of optimization software such as routers or solvers would not be disqualifying);

3. Not actively solicit investments or provide investment recommendations; and

4. Integrate with blockchain networks and smart contract protocols that have eliminated control-related trust dependencies through objective features, including autonomy, non-custodial design, and permissionless access, or have clearly demonstrated a good faith intention to decentralize.

How would this safe harbor impact early stage tech development? 

We strongly believe regulation needs to be flexible to account for innovations in software development. Decentralization is a process. Apps often do not eliminate control at conception and do so after multiple stages of trust minimization. Regulation that takes too rigid of an approach could impede innovation or subject investors to harm. Additionally, projects that eliminate operational control too early may place investors at risk by way of security or other vulnerabilities. 

As explained in our proposal: 

“...allowances should be made for Apps to still qualify for the safe harbor

where they integrate with protocols that have not yet eliminated control if: (a) the protocol is pursuing decentralization in good faith and (b) transaction volumes or the total value of assets deposited in the protocol falls under a specified threshold. The Commission could also consider providing greater leniency where Apps are not engaged in for-profit activity. Collectively, these would enable the Commission to optimize for both investor protection and fostering of innovation."

Final thoughts?  

We believe that a safe harbor would provide much-needed regulatory clarity to developers of user interfaces and ensure that they can build in the United States without fear of the misapplication of laws inappropriate for modern software infrastructure.

At DEF, we deeply appreciate the SEC Crypto Task Force for engaging with the digital asset industry as they develop a regulatory framework that provides developers with clear rules but still leaves room for and incentivizes innovation. We extend a big thanks to the a16z team for their partnership on this submission.