I just saw that the SEC released a pretty interesting guidance on DeFi interfaces and how they can operate without having to register as broker-dealers. This is something many in the ecosystem have been waiting for for a long time.

The thing is, they defined what they call "covered user interfaces" — basically, those applications that allow you to interact with DeFi protocols, wallets, browser extensions, mobile apps. The key point is that they can operate without registration if they meet certain specific requirements.

The requirements are quite clear: the interface cannot hold custody of your funds, cannot give you investment advice, cannot execute orders on your behalf, charges flat fees, and cannot make decisions about your transactions. Additionally, they cannot label trading routes as "best" or "preferred." Basically, they have to be neutral.

Now, it’s important to clarify: the SEC makes it very clear that this is not a formal binding rule. It’s the current interpretation of the staff regarding existing law. And it will be in effect for five years unless a formal regulation is issued at the commission level.

The interesting part is the context. The industry has been asking for clarity on how DeFi developers and the entire infrastructure they build are regulated. Even after the SEC and CFTC issued joint guidance earlier this year, key questions about permissionless DeFi remained unanswered. Experts point out that regulators have been building frameworks mainly around centralized actors but leave the tougher questions about DeFi for later.

This uncertainty has caused quite a bit of anxiety in the industry about what will happen to protocol developers, front-end interface operators, and wallet providers. There’s a bill called CLARITY in Congress, but according to lawyers and observers, it leaves many issues unresolved.

Meanwhile, the CFTC and SEC say they are working to modernize rules and establish a clearer framework for on-chain software systems and interfaces. So we’ll probably see more developments on this topic in the coming months. DeFi regulation remains a work in progress.