Andreessen Horowitz (a16z) and the advocacy group DeFi Training Fund have requested the US Securities and Alternate Fee (SEC) to arrange a protected 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 Activity Pressure head Hester Peirce, a16z and the DeFi group stated 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 Alternate Act.”
In July, SEC Chair Paul Atkins additionally stated he had directed the company’s employees to “replace antiquated company guidelines and laws” regarding sure crypto and blockchain purposes.
A protected harbor, by way of SEC laws, would enable many firms providing crypto-related services to keep away from enforcement actions. The fee and particular person buyers have beforehand filed civil lawsuits in opposition to cryptocurrency firms 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 Alternate Act’s broker-dealer regulatory regime was designed to deal with must be eligible; in such instances, registration as a dealer below the Alternate Act is unwarranted and inappropriate,” stated the letter to the SEC, including:
“A protected harbor would supply much-needed regulatory readability, protect the Fee’s authority to supervise high-risk actions, and be sure that builders can construct in the US 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 protected harbor on the company. The corporate additionally stated in a separate letter that the fee “might take the next steps” of organising protected harbors for airdrops and community tokens.
Which firms might be impacted by the “protected harbor” proposal?
In June, the SEC reported that about 3,340 broker-dealers with $6.4 trillion in property had registered with the company as of 2024. The company famous on the time that there had been a pattern of “business consolidation, with a declining fraction of market members accountable for a bigger asset pool.”
The fee established the class of Particular Function Dealer-Sellers (SPBD) in December 2020 for custodying digital asset securities. Nonetheless, the SEC clarified in Might that the SPBD designation was not obligatory for “broker-dealers looking for to custody buyer crypto property which can be securities,” including that customary 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 property 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, known as the CLARITY Act, was handed by the Home of Representatives in July and awaits consideration within the Senate.
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