TLDR
- SEC staff issued conditional guidance for cryptocurrency trading apps on April 13.
- The platform should act as a neutral tool and avoid executing or advising trades.
- The framework requires a clear fee structure and conflict disclosure.
- Unless replaced, the employee’s position expires after five years.
- The SEC is advancing the proposed Reg Crypto framework through federal review.
The US Securities and Exchange Commission (SEC) has outlined the conditions under which it will allow certain cryptocurrency trading apps to operate without broker registration. The agency’s trading and markets department issued a staff statement April 13. The guidelines define when a platform can function as a neutral instrument instead of a regulated intermediary.
SEC defines restrictions for cryptocurrency trading apps under broker rules.
SEC staff said broker-dealer registration can be avoided if a “covered user interface provider” serves as a neutral interface. They must not recommend transactions or provide investment advice. You must not promote specific tokens or trading channels. Instead, you should rely on objective criteria like price or speed when displaying options.
Employees also prohibited suppliers from executing transactions or handling customer assets. They cannot negotiate or structure transactions on your behalf. The statement said such activity would give rise to broker status under federal securities laws. Therefore, the platform should limit its role to displaying information and routing user instructions.
The guidelines call for consistent and transparent fees across assets and execution pathways. Providers cannot adjust fees depending on the token or location chosen. If a platform maintains a relationship with a trading venue, that relationship must be clearly disclosed. Additionally, affiliated and non-affiliated locations must be treated fairly.
Staff imposed strict disclosure standards on those service providers. Platforms must disclose their unregistered status and explain how their system works. You should outline your fee model, conflicts of interest, and cybersecurity controls. It should also describe technical limitations and risks associated with the interface.
The statement made it clear that it does not constitute binding law but rather reflects the views of executive staff. But this is indicative of how the SEC will approach enforcement over the next five years. The framework expires after five years unless the agency replaces it. Until then, companies can rely on a conditional no-action stance.
SEC Advances Reg Crypto Proposal for Token Offering
The SEC is also advancing a broader “Reg Crypto” framework under Chairman Paul Atkins. The proposal is currently being reviewed by the Office of Information and Regulatory Affairs. We are looking to update the rules governing token fundraising and decentralized finance activities.
Under the draft plan, early-stage cryptocurrency startups would be eligible for limited exemptions. This framework allows for structured token offerings under the Securities Act of 1933. It will also create a safe harbor path for tokens transitioning from security status. The SEC aims to clarify when digital assets no longer qualify as securities.
The proposal also calls for coordination with the Commodity Futures Trading Commission. The SEC plans to coordinate supervisory standards across the agency. The agency seeks to streamline compliance for token issuers and trading platforms. Officials have not yet announced a final timeline for adoption.
Chairman Atkins said the agency wants clearer boundaries around digital asset markets. The SEC continues to review public comments on the Reg Crypto framework. The proposal remains under federal review as of April 13. Additional updates will be made once OIRA completes its assessment.