a16z Advises SEC: Qualified DEXs Do Not Need to Register as Exchanges

a16z wants to establish a policy safe harbor for DEXs and DEX applications.

Written by: David Sverdlov, Miles Jennings, Scott Walker, Aiden Slavin

Translated by: Chopper, Foresight News

The U.S. Securities and Exchange Commission (SEC) continues to advance "Project Crypto," with grand ambitions to facilitate the on-chain migration of U.S. capital markets.

In April this year, the SEC’s Division of Trading and Markets clarified that certain user interfaces may operate without registering as broker-dealers, provided specific conditions are met. In June, the SEC proposed repealing Rule 611 of Regulation National Market System (Regulation NMS), a move that will clear a major obstacle to the development of the on-chain securities market. Last week, the SEC issued an "Innovation Exemption Rule," exempting certain trading venues—Tokenized Securities Venues (TSVs)—from the definition of "exchange" under the Securities Exchange Act, while also removing some liquidity providers from the "dealer" category. This series of measures indicates that regulators recognize blockchain technology's potential to upgrade the financial system and that on-chain markets should not be forced into ill-fitting regulatory frameworks.