Code Without a License? The SEC Signals a Path for Crypto Interfaces Outside Broker Registration
On April 13, 2026, the staff of the SEC’s Division of Trading and Markets issued a statement addressing the application of broker-dealer registration requirements to certain software interfaces used in crypto asset securities transactions. The statement identifies a category of “Covered User Interface Providers” and describes the circumstances under which the staff would not recommend enforcement action under Section 15(a) of the Exchange Act.
The statement is both targeted and limited. It addresses only broker-dealer registration and applies solely to interfaces used in connection with crypto asset securities. It does not resolve broader questions under the federal securities laws and, by its terms, is an interim position that will expire in five years absent Commission action.
A Functional Approach to the Broker Analysis
The Staff’s framework reflects a shift toward a more functional analysis of software-driven market activity.
A Covered User Interface is described as software that translates user-defined transaction parameters into instructions that may be executed on a blockchain through a self-custodial wallet. Within that role, the interface may present market data, display potential execution paths, and facilitate the user’s ability to structure a transaction.
The analysis turns on whether the provider exercises discretion. The interface must operate based on pre-defined, objective criteria that are disclosed and capable of independent verification. The provider may not determine outcomes, influence execution decisions, or otherwise introduce judgment into the transaction process.
This distinction between facilitation and intermediation has appeared in prior Commission guidance addressing technology providers. The statement applies that reasoning directly to blockchain-based systems, where execution occurs through smart contracts rather than traditional market intermediaries.
Permitted Functionality and Structural Constraints
Within these parameters, the statement permits a range of functionality associated with modern trading interfaces.
Providers may present execution options derived from blockchain-based trading systems, including liquidity pools and aggregators, and may allow users to sort or filter those options using objective criteria such as price or speed. They may provide general educational content to assist users in formulating transaction parameters and may connect to affiliated trading venues, provided that such relationships are disclosed and structured on terms consistent with those offered to unaffiliated venues.
The statement draws clear boundaries around conduct that would fall outside this framework. A provider may not recommend or provide advice regarding specific transactions or securities, solicit particular trades, negotiate transaction terms, or arrange financing. Nor may it handle or direct orders beyond the limited functionality described, take custody of user assets or private keys, or execute or settle transactions. Even the presentation of information is constrained. The interface may display execution routes, but it may not characterize them in qualitative terms or suggest that one route is preferable to another.
Compensation and Neutrality
The Staff addresses compensation in a manner that departs in certain respects from prior positions.
The statement permits a Covered User Interface Provider to charge a flat fee or a per-transaction fee, including a percentage-based fee, provided that the fee is paid by the user and applied consistently across products, execution venues, routing paths, and counterparties. In this context, the Staff focuses on neutrality, rather than the mere existence of a transaction-based fee.
By contrast, compensation from third parties tied to transaction activity remains outside the scope of the statement. The Staff identifies payment for order flow as an example of impermissible compensation. This distinction reflects a continued concern that third-party payments may introduce incentives that affect routing or execution outcomes.
Operational Requirements and Disclosures
Reliance on the statement is conditioned on the implementation of policies, procedures, and disclosures addressing how the interface operates.
Providers are expected to establish controls for evaluating and monitoring the trading venues or blockchain-based systems to which the interface connects, using objective criteria such as liquidity, transparency, and security. Default transaction parameters must be subject to periodic reassessment, with attention to conflicts of interest and associated risks.
The disclosure framework is extensive. Providers must describe their role, disclose that they are not registered with the SEC in connection with the interface, and explain how transaction parameters and routing options are generated. They must also address fee structures, data usage, cybersecurity controls, and risks associated with blockchain execution. The Staff specifically identifies transaction ordering and maximal extractable value as risks that should be disclosed to users.
Relationship to Prior Developments
The statement should be viewed in the context of recent regulatory and judicial developments.
In its March 2026 interpretive release addressing the application of the federal securities laws to crypto assets, the Commission emphasized a more structured approach to classification and regulatory treatment. Earlier, in SEC v. Coinbase, the court addressed the role of wallet software and declined to treat that functionality, standing alone, as brokerage activity on the allegations presented.
The April 13 statement aligns with that trajectory. It focuses on the nature of the activity performed by the interface, rather than its proximity to a securities transaction.
At the same time, the framework does not fully align with parallel developments at the CFTC. The Commission’s March 2026 no-action letter addressing similar interface functionality in the derivatives context relies on a different set of conditions, including the involvement of registered intermediaries and individualized relief. Providers operating across both regimes will need to evaluate these frameworks independently.
Limitations and Open Questions
The statement leaves several issues unresolved.
It does not address whether a Covered User Interface Provider may be subject to exchange registration or other regulatory requirements under the federal securities laws. It does not address potential liability under the antifraud provisions. It also does not consider how the framework would apply where tokenized securities fall within the scope of Regulation NMS.
In addition, the statement reflects the views of staff rather than the Commission and does not have the force of law.
Commissioner Peirce, in a contemporaneous statement, supported the Staff’s approach but emphasized the need for a more durable regulatory framework. She also reiterated the view that enabling users to interact with blockchain systems, without more, does not convert a software provider into a broker.
Observations and Practical Considerations
The Staff’s statement reflects a constructive development in the SEC’s approach to crypto market structure. By focusing on function rather than form, it provides a clearer framework for distinguishing between software that facilitates transactions and activity that constitutes securities intermediation. For developers and market participants operating in the crypto asset securities space, the articulation of this boundary is a meaningful step.
At the same time, the Statement is limited in scope and expressly temporary. It addresses only broker-dealer registration, does not carry the force of law, and leaves a number of related regulatory questions unresolved. Its application will depend on specific facts and circumstances, including how a particular interface is designed, implemented, and monetized.
Accordingly, while the Statement creates additional clarity, it should not be viewed as a comprehensive solution or relied upon in isolation. Market participants should carefully evaluate their activities in light of the Statement and the broader regulatory framework, including other potential registration requirements and liability considerations. As with any evolving area of securities regulation, parties should consult with counsel before making decisions or taking action based on the developments discussed above.
