Andreessen Horowitz and the DeFi Education Fund are urging the U.S. Securities and Exchange Commission to create a safe harbor for qualifying decentralized exchanges, arguing that some peer-to-peer systems should not be treated like traditional exchanges.
The proposal would cover decentralized platforms that let users trade directly without taking control of their funds. Qualifying systems would be presumed not to operate as exchanges unless regulators show otherwise.
The push follows temporary SEC relief for permissioned platforms trading tokenized U.S. stocks. Commissioner Hester Peirce said the relief does not cover decentralized finance.
Four Conditions for DEXs
Under the proposal, DEXs would need to be non-custodial, automated, permissionless and credibly neutral. Users would retain control of their funds and approve their own transactions.
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The systems could not be controlled by a person or group able to make major rule changes independently. They would also need open access and rules applied equally across users and transactions.
Rules for DEX Apps
The proposal sets separate requirements for DEX applications, including interfaces, pricing and market data. Information would need to come from public, objective and independently verifiable sources.
Developers could maintain interfaces and make technical or security updates, while using publicly disclosed neutral filters for assets.
However, applications could not use centralized control to set prices, match trades or determine which transactions execute. The SEC has not adopted the proposal and is seeking public comment.
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