SEC grants 5-year exemption for DeFi platforms

The SEC now allows certain DeFi platforms to operate without broker-dealer registration or KYC, provided they remain non-custodial and use fixed fees. The exemption lasts five years and eases compliance for qualifying projects.

The U.S. Securities and Exchange Commission (SEC) has introduced new guidance that eases regulatory requirements for decentralized finance (DeFi) protocols. Under this updated framework, certain DeFi user interfaces—such as web platforms, wallet extensions, and mobile apps—can operate without registering as broker-dealers if they meet specific conditions. To qualify, platforms must remain non-custodial, refrain from providing investment advice or directing orders, and use only fixed, neutral fee structures. Users must retain control of their wallets and private keys, and platforms should avoid internal order books while connecting solely to public, permissionless smart contracts. The SEC stressed that each project must evaluate its own structure, as labels alone do not determine legal status. The five-year exemption also waives previous Know Your Customer (KYC) requirements for eligible interfaces, marking a significant regulatory shift that offers clarity and reduces compliance burdens for DeFi projects.