A16z Crypto and advocacy group call for NFT, DeFi app safe harbor at SEC

Andreessen Horowitz (a16z) and the advocacy enactment DeFi Education Fund person asked the US Securities and Exchange Commission (SEC) to acceptable up a harmless harbor programme for non-fungible token (NFT) and decentralized concern (DeFi) applications from the agency’s broker-dealer registration requirements.

In a Wednesday missive to SEC Commissioner and Crypto Task Force caput Hester Peirce, a16z and the DeFi radical said they were pursuing up connected US President Donald Trump’s Working Group connected Digital Assets telephone to “provide alleviation for definite DeFi work providers from the broker-dealer [...], speech [...], and clearing bureau [...] registration provisions of the Exchange Act.”

In July, SEC Chair Paul Atkins besides said helium had directed the agency’s unit to “update antiquated bureau rules and regulations” concerning definite crypto and blockchain applications. 

A harmless harbor, successful presumption of SEC regulations, would let galore companies offering crypto-related products and services to debar enforcement actions. The committee and idiosyncratic investors person antecedently filed civilian lawsuits against cryptocurrency companies for operating arsenic unregistered dealers, including Cumberland DRW, Coinbase and Kraken.

Letter to Hester Peirce from a16z and DeFi Education Fund. Source: a16z

Related: SEC Commissioner says ‘safe harbor’ laws would’ve made ICO problems worse

“The guiding rule of the harmless harbor is that lone those Apps which bash not engender the risks that the Exchange Act’s broker-dealer regulatory authorities was designed to code should beryllium eligible; successful specified cases, registration arsenic a broker nether the Exchange Act is unwarranted and inappropriate,” said the missive to the SEC, adding:

“A harmless harbor would supply much-needed regulatory clarity, sphere the Commission’s authorization to oversee high-risk activities, and guarantee that developers tin physique successful the United States without fearfulness of the misapplication of ineligible categories inappropriate for modern bundle infrastructure.”

The projected alteration successful SEC argumentation followed a16z sending a missive successful March to Peirce, detailing recommendations for an NFT harmless harbor astatine the agency. The institution besides said successful a abstracted missive that the committee “could instrumentality the pursuing steps” of mounting up harmless harbors for airdrops and web tokens.

Which companies could beryllium impacted by the “safe harbor” proposal?

In June, the SEC reported that astir 3,340 broker-dealers with $6.4 trillion successful assets had registered with the bureau arsenic of 2024. The bureau noted astatine the clip that determination had been a inclination of “industry consolidation, with a declining fraction of marketplace participants liable for a larger plus pool.”

The committee established the class of Special Purpose Broker-Dealers (SPBD) successful December 2020 for custodying integer plus securities. However, the SEC clarified successful May that the SPBD designation was not mandatory for “broker-dealers seeking to custody lawsuit crypto assets that are securities,” adding that modular requirements would use for some engaging successful integer plus and accepted securities.

How the SEC and Commodity Futures Trading Commission (CFTC) grip integer assets could alteration erstwhile lawmakers successful the US Congress code projected authorities to found a crypto marketplace structure. The starring measure for marketplace structure, called the CLARITY Act, was passed by the House of Representatives successful July and awaits information successful the Senate.

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