A16z Crypto and advocacy group name for NFT, DeFi app secure harbor at SEC

Discover the newest traits within the Web3 area. This article dives into: “A16z Crypto and advocacy group call for NFT, DeFi app safe harbor at SEC”.

Andreessen Horowitz (a16z) and the advocacy group DeFi Education Fund have requested the US Securities and Exchange Commission (SEC) to arrange a secure harbor program for non-fungible token (NFT) and decentralized finance (DeFi) functions from the company’s broker-dealer registration necessities.

In a Wednesday letter to SEC Commissioner and Crypto Task Force head Hester Peirce, a16z and the DeFi group mentioned they had been following up on US President Donald Trump’s Working Group on Digital Assets name to “provide relief for certain DeFi service providers from the broker-dealer […], exchange […], and clearing agency […] registration provisions of the Exchange Act.”

In July, SEC Chair Paul Atkins additionally mentioned he had directed the company’s workers to “update antiquated agency rules and regulations” regarding sure crypto and blockchain functions. 

A secure harbor, when it comes to SEC regulations, would enable many firms providing crypto-related services to keep away from enforcement actions. The fee and particular person traders have beforehand filed civil lawsuits in opposition to cryptocurrency firms for working as unregistered sellers, together with Cumberland DRW, Coinbase and Kraken.

Letter to Hester Peirce from a16z and DeFi Education Fund. Source: a16z

Related: SEC Commissioner says ‘safe harbor’ legal guidelines would’ve made ICO issues worse

“The guiding principle of the safe harbor is that only those Apps which do not engender the risks that the Exchange Act’s broker-dealer regulatory regime was designed to address should be eligible; in such cases, registration as a broker under the Exchange Act is unwarranted and inappropriate,” mentioned the letter to the SEC, including:

“A safe harbor would provide much-needed regulatory clarity, preserve the Commission’s authority to oversee high-risk activities, and ensure that developers can build in the United States without fear of the misapplication of legal categories inappropriate for modern software infrastructure.”

The proposed change in SEC coverage adopted a16z sending a letter in March to Peirce, detailing suggestions for an NFT secure harbor on the company. The firm additionally mentioned in a separate letter that the fee “could take the following steps” of establishing secure harbors for airdrops and community tokens.

Which firms could possibly be impacted by the “safe harbor” proposal?

In June, the SEC reported that about 3,340 broker-dealers with $6.4 trillion in belongings had registered with the company as of 2024. The company famous on the time that there had been a pattern of “industry consolidation, with a declining fraction of market participants responsible for a larger asset pool.”

The fee established the class of Special Purpose Broker-Dealers (SPBD) in December 2020 for custodying digital asset securities. However, the SEC clarified in May that the SPBD designation was not obligatory for “broker-dealers seeking to custody customer crypto assets that are securities,” including that normal necessities would apply for each partaking in digital asset and conventional securities.

How the SEC and Commodity Futures Trading Commission (CFTC) deal with digital belongings may change as soon as lawmakers within the US Congress handle proposed laws to ascertain a crypto market construction. The main invoice for market construction, known as the CLARITY Act, was handed by the House of Representatives in July and awaits consideration within the Senate.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered

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