Andreessen Horowitz (a16z) and the advocacy group DeFi Education Fund are requesting the U.S. Securities and Exchange Commission (SEC) to establish a safe harbor for non-fungible tokens (NFTs) and decentralized finance (DeFi) applications, exempting these applications from broker-dealer registration requirements.
a16z and DeFi organizations stated in a letter to SEC Commissioner and cryptocurrency working group leader Hester Peirce that they are responding to the call of former U.S. President Trump's Digital Asset Working Group, seeking exemptions from broker, exchange, and clearing agency registration requirements for certain DeFi service providers.
SEC Chair Paul Atkins also indicated that he has instructed agency staff to update outdated rules regarding cryptocurrencies and blockchain applications. The safe harbor will allow many companies providing crypto-related products and services to avoid enforcement actions. Previously, the Commission and individual investors had filed civil lawsuits against cryptocurrency companies for operating without registered brokers.
The safe harbor provides much-needed regulatory clarity, retaining the Commission's oversight over high-risk activities and ensuring that developers building in the U.S. do not have to worry about the improper application of legal categories.
The way the SEC and the Commodity Futures Trading Commission (CFTC) handle digital assets may change, depending on legislative proposals from the U.S. Congress regarding the establishment of a crypto market structure. The main bill on market structure, the 'CLARITY Act,' has passed the House and is awaiting consideration by the Senate.