Original Author: KarenZ, Foresight News
For a long time, whether the "front-end interface" in the cryptocurrency field constitutes brokerage activity has been a focal point of controversy.
On April 13, 2026, the U.S. Securities and Exchange Commission's Division of Trading and Markets (SEC) issued an important staff statement, drawing clear regulatory boundaries for crypto asset securities trading interfaces: User interface providers such as DeFi front-ends, browser extensions, and self-custody wallets that meet specific conditions can operate without registering as broker-dealers.
In the SEC's view, if an interface merely acts as a "translator," converting user buy/sell parameters (currency, price, quantity) into on-chain instructions and providing market data (such as Gas fees, execution paths), then it is essentially closer to a technical service than to matching trades.
Of course, this statement is not a formal rule but the current view of the SEC staff, valid for 5 years—unless the Commission takes subsequent action, it will be automatically withdrawn on April 13, 2031.
This temporary guidance, valid for 5 years, is both a key concession by the SEC to crypto front-end businesses and sets ironclad rules for compliance practices during the tokenized securities boom—neutrality, transparency, and full user control become the three core principles of DeFi front-end compliance.
What Kind of Interface Can Be "Exempted"?
The core of this statement is to define the scope of "Covered User Interfaces" and provide clear exemption conditions, ending the industry's long-standing compliance anxiety over "whether software tools constitute brokerage behavior."
So-called "Covered User Interface":
- Form: Websites, browser extensions, mobile apps, software tools embedded in self-custody wallets;
- Function: Only assists users in preparing crypto asset securities transactions—converting parameters such as buy/sell direction, quantity, and price into blockchain-executable code for users to sign and submit on-chain using their self-custody wallets.
- Additional services: May provide market data such as prices, routing, Gas fees, or educational content on trading, but must not execute, match, or custody assets.
The SEC explicitly stated that "crypto asset securities" here include tokenized versions of stock or debt securities. The key prerequisite is pure self-custody—the interface provider has no control over user private keys, does not custody, hold, or manage assets. The statement particularly emphasizes that this does not apply to situations where custodial wallet services are provided; it is limited to scenarios where users have full control of their private keys.
According to Section 15(a) of the Securities Exchange Act of 1934, institutions that induce or attempt to induce the purchase or sale of securities and execute transactions for the accounts of others must register as broker-dealers. However, the SEC staff clearly stated in the statement: Interfaces that merely provide transaction preparation tools, do not participate in execution, and do not control assets do not meet the definition of a "broker"—they are essentially "software assistants for user-autonomous trading," not financial intermediaries.
Twelve Compliance Red Lines: Neutrality is Core
The SEC staff explicitly stated that interface providers seeking exemption from broker-dealer registration must strictly adhere to 12 conditions. Summarizing their core logic, it mainly focuses on the following three dimensions:
1. Extreme Neutrality and Non-Inducement
Interface providers are strictly prohibited from "promoting" specific securities to users. The interface must allow users to customize transaction parameters (such as slippage, priority fees) and can only provide educational materials, not investment advice. Most critically, the system must not subjectively evaluate execution paths—it cannot tell users which path is the "best price" or "most reliable."
Specifically, if the interface only displays one potential execution path, it must provide functionality for users to view other paths; if multiple paths are displayed, it must provide filtering or sorting tools based on objective factors (e.g., alphabetical order, lowest/highest price, speed, etc.). Simultaneously, when preparing user transaction instructions and displaying market data, the interface can only use software based on pre-disclosed objective parameters, and these parameters must be independently verifiable.
Furthermore, if the trading venue connected to or interacted with by the interface is created, provided, or operated by the provider or its affiliates, this affiliation must be clearly disclosed to the user, and the connection or interaction must be on the same terms and conditions as with non-affiliated interfaces.
2. Severing Interest Associations and Payment for Order Flow
Fee models are strictly limited. Providers can only charge fixed fees from users (which can be a fixed amount or a fixed percentage of the transaction), and it must be product-agnostic, routing-agnostic, and counterparty-agnostic.
The SEC explicitly stated in a footnote that this means providers cannot receive compensation from any other person based on the size, value, or occurrence of a transaction—this directly excludes "payments for order flow."
In other words, interface providers cannot "sell" user orders to a particular DEX, market maker, or liquidity pool and then receive kickbacks from them.
In plain language: You, as an interface maker, can only charge users fixed fees—you can charge a fixed handling fee per transaction, but this fee must be objective and consistent, treating all assets, all execution paths, and all counterparties equally. You cannot earn more because an order is routed to a particular protocol, nor can you receive dividends from a backer based on high trading volume. This "unbundled interest" fee logic is a key firewall to prevent conflicts of interest.
3. Enhanced Information Disclosure and Audit Responsibility
You must loudly tell users: "I am not registered with the SEC, I am not regulated," and fully disclose all conflicts of interest and audit processes. Compliance is no longer a "one-time effort." Providers must elevate disclosure obligations to an unprecedented level: from software parameter logic and the risks of default settings, to cybersecurity strategies, MEV (Maximal Extractable Value) prevention mechanisms, and even the terms of interaction with affiliated liquidity pools, all must be prominently publicized.
In short, the interface can only act as an "information porter" and an "instruction translator," and must never cross the line to become an invisible market maker, order router, or investment advisor.
The statement also clearly delineates no-go zones: Interface providers must not negotiate transaction terms, must not recommend specific crypto asset securities transactions, must not provide investment advice, must not arrange financing, must not process transaction documents, must not perform independent asset valuations, must not hold or access user funds, securities, or stablecoins, must not execute or settle transactions, must not accept or route orders. Once these boundaries are crossed, the exemption资格 is immediately lost.
The Real Impact on DeFi Front-Ends
This statement is both a tight constraint and a protective talisman for front-end operators.
In recent years, the crypto market has been transitioning from "wild growth" to "institutionalized construction." As the scale of tokenized securities expands, a large amount of traditional debt and equity is being moved on-chain, and front-end interfaces have effectively become gateways to capital markets. The SEC's move essentially acknowledges the separation between the "technical front-end" and the "trading back-end": technology can remain neutral, but it must operate without touching the core functions of financial intermediation.
After this statement takes effect, the industry must re-examine existing monetization models:
- Allowed: Fixed Gas fees paid directly by users, objective percentage-based handling fees (as long as they are applied equally to all transactions).
- Prohibited: Any third-party kickbacks, revenue-sharing agreements, partnership fees settled based on TVL or trading volume.
It is worth noting that the SEC staff statement treats MEV as an inherent structural risk in on-chain transaction architecture. The focus of regulation is on "transparency" and "user right to know": front-end interfaces must truthfully inform users of the potential execution deviations and information leakage risks brought by MEV, and reduce asymmetric exploitation through objective and verifiable internal control mechanisms.
For crypto developers, the task is now very clear: check code logic, remove any algorithm guidance with subjective preferences, complete the twelve compliance disclosures, and establish comprehensive audit processes. The SEC also recommends that providers establish, maintain, and enforce policies and procedures related to interface operations, and keep books and records (e.g., utilizing publicly available distributed ledger technology transaction records supplemented by internal non-public book records). Compliance is no longer an option but a prerequisite for large-scale application.
Of course, the SEC explicitly stated in the statement that this is a "staff view," not a formal rule of the Commission. The five-year validity period also reflects the regulators' cautious attitude towards rapidly evolving technology. They have given the industry five years to prove whether technological neutrality can truly protect investors without intermediary participation. The outcome of this experiment will determine the direction of crypto finance for the next five years.
The regulatory fog is clearing, and there is not much time left for the "gray area."
