The SEC Staff sets out conditions under which providers of certain cryptoasset securities-transaction interfaces may operate without broker-dealer registration.

By Zachary Fallon, Stephen P. Wink, Jenny Cieplak, Naim Culhaci, Haoyu Gu, Dallin Adams, and Deric Behar

Key Points:

  • The Statement lists 12 conditions (including routing transparency, disclosures, and the absence of discretionary functions) under which the Staff will not object to a Covered User Interface Provider operating without broker-dealer registration.
  • The Staff permits Covered User Interface Providers to receive transaction-based compensation from users, despite the SEC’s longstanding treatment of such compensation as a “hallmark” of broker-dealer status, but expressly prohibits payment for order flow.
  • The Statement does not afford relief to providers that engage in other broker-dealer activities involving securities, such as negotiating transactions, making investment recommendations, holding user funds, executing or settling transactions, or taking or routing orders.

On April 13, 2026, the Staff of the SEC’s Division of Trading and Markets (Staff) issued a statement (the Statement) addressing the broker-dealer registration requirements under Sections 15(a) and 15(b) of the Securities Exchange Act of 1934 (Exchange Act) with respect to persons that create, offer, or operate certain interfaces “designed to assist users” in cryptoasset securities (Covered User Interface Providers). Under the conditions specified, the Staff will not object to a Covered User Interface Provider operating without broker-dealer registration.

The Statement applies to persons who create, offer, or operate websites or downloadable wallet software, but does not address persons who create, offer, or operate custodial wallets that control users’ private keys.

Covered User Interfaces

The Statement defines a “Covered User Interface” as “an interface provided by a website, browser extension, or other software app (e.g., mobile app) that may be embedded in a wallet or separately available for download, designed to assist users engaging in user-initiated crypto asset securities transactions on blockchain protocols (or blockchain-based smart contracts) utilizing the user’s self-custodial wallet.” These interfaces prepare code that converts user-identified transaction parameters (e.g., buy/sell, volume, cryptoasset security, and price or price range) into blockchain-legible commands for “signature” via private key and transmission via the user’s self-custodial wallet. They may also provide market data (e.g., execution routes, asset prices, gas fees, etc.) and educational material.

Conditions for the Staff’s Non-Objection

The Staff will not object to a Covered User Interface Provider operating without broker-dealer registration when it satisfies the following conditions:

  • Users have the ability to customize any default transaction parameters, and the interface provides educational material to help users set their desired parameters.
  • The provider does not solicit investors to engage in any specific cryptoasset securities transactions (though soliciting investors to use the interface generally remains permissible).
  • The provider selects one or more default trading venues (e.g., limit order book-matching systems or request-for-quote systems) or distributed ledger trading systems (e.g., automated market maker liquidity pools, liquidity aggregators, etc.) with which to connect or interact.
  • Where any connected venue or distributed ledger trading system is affiliated with the provider, the affiliation must be disclosed, and the interface must interact with it “on the same terms and conditions as any other interface that is unaffiliated with or not provided by” the provider.
  • Multiple routes must be provided, if applicable, and while the user interface may initially display only a single route, the interface must give users the ability to filter or sort based on objective factors (e.g., price, speed, and alphabetical order).
  • The interface does not provide commentary on any route, such as labeling one as “best price” or “most reliable.”
  • The interface only uses software that “operates based on pre-disclosed and objective parameters that are independently verifiable” and does not “exercise any control or discretion over, or engage in any decision-making regarding, the market information provided, or securities transactions” beyond what the Statement describes.
  • The provider may receive a fixed flat fee or fixed percentage of the transaction based on objective factors, applied consistently (e.g.,not variable or tiered), which is “product, execution route, execution venue, and counterparty agnostic.” The provider may not receive compensation from anyone other than the user, which precludes payments for order flow.
  • The provider establishes policies, procedures, and controls reasonably designed to (i) evaluate, onboard, and audit connected venues and distributed ledger trading systems based on objective factors (e.g., liquidity, latency, transparency, and security); and (ii) evaluate, determine, and periodically reassess any default transaction parameters and address any associated conflicts of interest.
  • The provider prominently discloses to users, and promptly updates, all material facts relating to the nine enumerated categories, including the provider’s role relating to its creation, offering, or operation of the interface; a prominent disclaimer that the provider is not registered with or regulated by the SEC with respect to the interface; fees and their structure; material conflicts of interest; limitations of the interface; cybersecurity policies; policies, procedures, and controls to protect user trading information; venue integration; and default transaction parameters and associated risks.

The relief is only available to a provider that satisfies all the above conditions. Depending on the nature of the app, full compliance could prove difficult in practice.

Importantly, the Statement is limited to broker-dealer registration under Section 15(a) of the Exchange Act. It does not address whether any provider, connected trading venue, or distributed ledger trading system could constitute an “exchange” under Section 3(a)(1) or an alternative trading system under Regulation ATS, nor does it address other potential obligations or liabilities under the federal securities laws.

Express Carveouts

In addition to establishing the foregoing conditions, the Statement makes clear that relief would not extend to Covered User Interface Providers that engage in, or hold themselves out as providing, certain services with respect to securities (including cryptoasset securities) that have been historically linked to broker-dealers.

Such activities include negotiating terms for any transaction; soliciting specific cryptoasset securities transactions; making investment recommendations or providing advice; arranging for financing; processing trade documentation; conducting independent asset valuations; holding, having access to, handling, managing, or possessing user funds, securities, or stablecoins; executing or settling transactions; or taking or routing orders.

The inclusion of “arranging financing” in this list may be noteworthy, as it arguably signals that the Statement cannot be extended to cryptoasset securities-lending platforms.

Conclusion

While permitting transaction-based compensation for unregistered broker-dealers is significant (the second such instance after the 2014 M&A broker no-action letter), the highly prescriptive nature of the relief in this case may limit its practical utility and may render full compliance difficult for many interfaces. Specifically, some of these conditions may be challenging to implement technologically for certain types of apps, including the requirement to audit connected venues and systems on an ongoing basis, as well as the prohibition on payment for order flow and the presentation of required disclosures.

Commissioner Hester M. Peirce commended the Statement for narrowing the definition of “broker” somewhat under the securities laws, noting that previous SEC Staff no-action letters and enforcement actions “have contorted the term ‘broker’ beyond recognition.” However, she “favor[s] a more permanent regulatory approach that addresses the broker definition in light of current market circumstances.” 

The Staff described the Statement as “an interim step while the Commission continues to consider various regulatory issues relating to crypto asset securities activities” and has invited public comment on all aspects of the Statement. Absent intervening SEC action, the Statement will be considered withdrawn five years from April 13, 2026.

Follow this and other critical developments on Latham’s US Crypto Policy Tracker.