SEC Releases Statement on Broker-Dealer Registration Requirements Related to Crypto Assets

The staff in the SEC’s Division of Trading and Markets has released a statement on the broker-dealer registration requirements of Section 15(a) of the Securities Exchange Act of 1934 “with respect to a person [footnote omitted] that creates, offers, and/or operates certain interfaces utilized by users to, among other things, prepare transactions in crypto asset securities,” known as a “covered user interface provider.” As defined in the statement, a “covered user interface” is “an interface provided by a website, browser extension, or other software application (e.g., mobile application) that may be embedded in a wallet [footnote omitted] or separately available for download, designed to assist users [footnote omitted] engaging in user-initiated crypto asset securities transactions on blockchain protocols (or blockchain-based smart contracts) utilizing the user’s self-custodial wallet.” The statement outlines circumstances in which covered user interface providers would be exempt from broker-dealer registration under Exchange Act Section 15(b) when they are “creating, offering, and/or operating” covered user interfaces.

The statement is part of the Commission’s effort to clarify “the application of the federal securities laws to activities involving crypto asset securities.” Interested parties are encouraged to submit their views on the statement either on paper or via the SEC’s online submission form.