Andreessen Horowitz and the DeFi Education Fund submitted a petition to the U.S. Securities and Exchange Commission (SEC) proposing that decentralized applications (dApps) that don’t perform intermediary functions be exempted from broker registration requirements.
Venture firm Andreessen Horowitz (a16z) and the advocacy group DeFi Education Fund (DEF) presented the SEC with a “safe harbor” framework. It envisions a special regime for DeFi services and NFT apps that act as technical interfaces for interacting with blockchain networks and smart contracts, but don’t hold user assets or provide investment advice.
The authors note that the legal uncertainty surrounding such applications in the U.S. stifles industry growth and increases risks for developers. The proposed “safe harbor” would apply only to dApps meeting four conditions:
- Non-custodial design. Users retain full control of assets, developers don’t have access to private keys or funds.
- No discretion. Transaction routing and parameters are determined by objective algorithms, the final decision rests solely with the user.
- No active solicitation or providing investment recommendations. The interface displays only neutral information without promoting or highlighting specific assets.
- Integration with decentralized protocols. Only autonomous, permissionless, non-custodial systems are used, preventing unilateral operational control.
The proposal cites the SEC vs. Coinbase case , where the court ruled that wallet functionality without access to funds and without the ability to execute transactions without user approval does not constitute broker activity. Representatives from a16z and DEF believe that codifying a “safe harbor” would provide regulatory predictability, allow the SEC to focus on genuinely risky projects, and preserve opportunities for developing DeFi apps and NFT services in the U.S. without excessive legal barriers.
In March of this year, the U.S. House of Representatives voted to repeal the rule requiring all DeFi platforms to submit financial information about their users to the IRS.
