SEC Staff Sets Five-Year Safe Harbor for Non-Custodial DeFi Interfaces

Overview

• The SEC’s Division of Trading and Markets issued staff guidance creating a five-year safe harbor for “Covered User Interfaces,” which are tools that let people trade crypto from their own wallets.
• To qualify, an interface cannot hold customer assets or keys, cannot recommend trades, must charge fixed neutral fees, and must disclose any ties to the venues it connects to.
• DeFi web front-ends and wallet extensions, such as a Uniswap site or a browser wallet, can keep operating without registering as broker-dealers if they meet those terms.
• The policy is a staff statement rather than law, so a future commission could roll it back, and industry groups are pressing Congress for legislation to make the protections durable.
• Kraken reported an extortion attempt tied to two support staff who misused access to view limited client data, and the exchange said no systems were breached and customer funds stayed safe.