Staff Statement Regarding Broker-Dealer Registration of Certain User Interfaces Utilized to Prepare Transactions in Crypto Asset Securities

The Staff of the Division of Trading and Markets ("Staff") of the Securities and Exchange Commission ("Commission") is issuing the following statement[1] to provide its views on the broker-dealer registration requirements under Section 15(a) of the Securities Exchange Act of 1934 ("Exchange Act") with respect to a person[2] that creates, offers, and/or operates certain interfaces utilized by users to, among other things, prepare transactions in crypto asset securities[3] ("Covered User Interface Providers").[4]

This statement is part of an effort to provide greater clarity on the application of the federal securities laws to activities involving crypto asset securities. The Staff is providing its views as an interim step while the Commission continues to consider various regulatory issues relating to crypto asset securities activities and the feedback it has received.[5] Accordingly, absent intervening action by the Commission, this statement will be considered withdrawn effective five years from April 13, 2026.

For further information, please contact the Staff by emailing [email protected].

I. Covered User Interfaces

For purposes of this statement, a "Covered User Interface" is an interface provided by a website, browser extension, or other software application (e.g., mobile application) that may be embedded in a wallet[6] or separately available for download, designed to assist users[7] engaging in user-initiated crypto asset securities transactions on blockchain protocols (or blockchain-based smart contracts) utilizing the user's self-custodial wallet. Covered User Interfaces typically provide functionality with respect to any type of crypto asset transaction. This statement only addresses the use of a Covered User Interface for crypto asset securities transactions.

Specifically, it is the Staff's understanding that Covered User Interfaces prepare code enabling users to interact with blockchain protocols (or blockchain-based smart contracts) by converting user-identified crypto asset securities transaction parameters (e.g., buy/sell, volume, crypto asset security, and price or price range) into blockchain-legible commands for signature and transmission via the user's self-custodial wallet.[8] Covered User Interfaces may also provide users with market data, such as potential execution routes, asset prices, and estimated transaction costs (e.g., "gas" fees) for crypto asset securities transactions. Covered User Interface Providers generally charge users a fixed percentage per transaction. Covered User Interfaces may present educational material to users to help users formulate and set their desired crypto asset securities transaction parameters on a transaction-by-transaction or default basis. Covered User Interface Providers may solicit investors to use the Covered User Interface.

II. The Staff's View of Covered User Interface Activities Addressed by this Statement

Section 15(a) of the Exchange Act provides that, absent an exception or exemption, it is unlawful for any broker to induce or attempt to induce the purchase or sale of any security unless such broker is registered in accordance with Section 15(b) of the Exchange Act. Section 3(a)(4) of the Exchange Act generally defines a "broker" to mean any person engaged in the business of effecting transactions in securities for the account of others.

In circumstances where a Covered User Interface Provider takes the measures discussed below relating to its creation, offering, and/or operation of a Covered User Interface, the Staff will not object to the Covered User Interface Provider creating, offering, and/or operating a Covered User Interface without registering as a broker-dealer pursuant to Section 15(b) of the Exchange Act.

The Staff's view herein is expressly limited to the application of Section 15 of the Exchange Act to Covered User Interface Providers, including persons who create, offer, and/or operate self-custodial wallets with an associated Covered User Interface,[9] in the following circumstances:

• the Covered User Interface permits users to customize any default crypto asset security transaction parameters[10] and the Covered User Interface provides educational material to users to help users formulate and set their desired transaction parameters;
• the Covered User Interface Provider does not solicit investors to engage in any specific crypto asset securities transactions;
• the Covered User Interface Provider selects one or more default trading venues (e.g., limit order book matching systems, request-for-quote systems) or distributed ledger trading systems (e.g., automated market maker liquidity pools and/or liquidity aggregators) with which to connect or interact;
• to the extent that the Covered User Interface connects or interacts with one or more trading venues or distributed ledger trading systems that is created, offered, and/or operated, directly or indirectly, by the Covered User Interface Provider or its affiliates,[11] such affiliation is clearly disclosed to users, and the Covered User Interface connects or interacts with any such trading venue or distributed ledger trading system on the same terms and conditions as any other interface that is unaffiliated with or not provided by the Covered User Interface Provider;
• to the extent that the Covered User Interface displays only one potential execution route to a user, the Covered User Interface provides the user the ability to see additional routes, if applicable;
• to the extent that more than one potential execution route is displayed to a user, the Covered User Interface provides filtering or sorting tools that display potential routing destinations based on objective factors (such as alphabetically, lowest/highest price, or speed) and allows the user to sort based on such factors;
• the Covered User Interface does not provide commentary on any potential execution route(s) displayed to a user, such as indicating that an execution pathway offers the "best price" or is the "most reliable";
• for purposes of preparing a user's trading instructions and displaying market data related to potential execution routes, the Covered User Interface only uses software that operates based on pre-disclosed and objective parameters that are independently verifiable;
• aside from the functions described in this statement, the Covered User Interface does not exercise any control or discretion over, or engage in any decision-making regarding, the market information provided, or securities transactions;
• the Covered User Interface Provider limits its compensation associated with the Covered User Interface to a fixed charge to the user, which may be charged per crypto asset securities transaction (as a flat fee or percentage of the transaction) or as a flat fee, and is based on objective factors, applied consistently, and is product, execution route, execution venue, and counterparty agnostic;^[12]
• the Covered User Interface Provider establishes policies, procedures, and controls that are reasonably designed to: (i) evaluate, onboard, and audit the trading venues and distributed ledger trading systems that the Covered User Interface will connect to or interact with for market data based on objective factors (e.g., liquidity, latency, transparency, verifiability, neutrality, auditability, and security), and (ii) evaluate, determine, and periodically reassess any default crypto asset security transaction parameters based on objective factors, and address any conflicts of interest or risks associated with any default crypto asset security transaction parameters; and
• the Covered User Interface Provider prominently discloses to the user, and promptly updates as necessary, all material facts related to: (1) the Covered User Interface Provider's role relating to its creation, offering, and/or operation of a Covered User Interface, including a prominent disclaimer stating that the Covered User Interface Provider is not registered with or regulated by the Securities and Exchange Commission relating to its creation, offering, and/or operation of a Covered User Interface; (2) the Covered User Interface Provider's fees associated with the use of the Covered User Interface, their calculation, and their structure; (3) material conflicts of interest associated with a crypto asset securities transaction and use of users' trading information by the Covered User Interface Provider or its affiliates; (4) any limitations associated with the use of the Covered User Interface, such as limitations, permissions, or restrictions regarding specific crypto asset securities, market data, and trading venues or distributed ledger trading systems available for user transactions; (5) the parameters used in the Covered User Interface's software for purposes of preparing a user's trading instructions and displaying market data related to potential execution routes; (6) the Covered User Interface Provider's current cybersecurity policies, procedures, and controls, if any, for the Covered User Interface (e.g., to minimize errors, prevent unauthorized access, and protect from internal and external threats); (7) the Covered User Interface Provider's policies, procedures, and controls, if any, to protect user trading information, including from potential fraud or manipulation (e.g., involving maximal extractable value ("MEV") strategies);[13] (8) the Covered User Interface's integration with trading venues or distributed ledger trading systems, including the names of such trading venues or distributed ledger trading systems and the Covered User Interface Provider's policies, procedures, and controls to evaluate, onboard, and audit such trading venues or distributed ledger trading systems; and (9) any default crypto asset security transaction parameters, including how they are determined, the associated risks, and conflicts of interest and the Covered User Interface Provider's policies, procedures, and controls to address any default crypto asset security transaction parameters and any associated conflicts of interest or risks.

Except as outlined above, this statement does not extend to a Covered User Interface Provider that engages in, or holds itself out as, providing any of the following services with respect to securities, including crypto asset securities:

• negotiating terms for any transaction;
• solicitating specific crypto asset 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.

Establishing, maintaining, and enforcing policies and procedures relating to the operation of the Covered User Interface and maintaining books and records (such as by utilizing publicly available distributed ledger technology transaction records in coordination with the maintenance of internal, non-public books and records), may be helpful to a Covered User Interface Provider in demonstrating that it is creating, offering, and/or operating a Covered User Interface as described in this statement.

The Staff welcomes input and comments on all aspects of this statement. Members of the public who wish to provide their views on this statement may submit their comments electronically or on paper. Please submit comments using one method only. Information that is submitted will be posted on the SEC's website and all comments received will be posted without change. Persons submitting comments are cautioned that personal identifying information is not redacted or edited from comment submissions, and they should only submit information that they wish to make publicly available. All submissions should refer to File Number 4-894, and the file number should be included on the subject line if email is used.

Electronic Comments:

Use the SEC's online submission form or send an email to [email protected] with "File Number 4-894" included in the subject line.

Paper Comments:

Send paper comments to Vanessa Countryman, Secretary, Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-1090.