The U.S. Securities and Exchange Commission (SEC) has issued a pivotal new guidance framework, outlining specific conditions under which cryptocurrency trading applications and non-custodial wallets can operate without registering as broker-dealers. In a significant regulatory development, the agency clarified that software which facilitates securities transactions directly with individual user wallets will not automatically trigger stringent broker-dealer regulations, potentially easing operational burdens for key industry players.

According to the SEC’s new guidance, user interfaces such as websites and mobile applications that support blockchain-based trading do not need to be registered as securities brokers if they meet certain conditions. These conditions include “no order redirection, no investment advice, no storage of user assets, and only fixed, neutral fee structures.”

Further, the SEC stated that this decision is an interim step to clarify the application of regulations relating to crypto asset securities. “This statement is part of an effort to provide greater clarity regarding the application of federal securities laws to activities involving crypto asset securities.”

Last week, SEC Chair Paul Atkinsto pass crypto market structure legislation, saying that now is the time. In a post to X, the SEC Chair said that the SEC and CFTC are all set to pass it, and the task now sits with Congress. The SEC has dramatically changed its tune on the crypto sector in the last two years, with the sector growing in importance and relevance in traditional finance. Under the new Chair, Paul Atkins, the securities regulator is now mostly pro-crypto, with several rule changes lessening the chokehold on the industry being passed in the last year.