|

Solana Policy Institute Demands SEC Exemption for DeFi Developers — Here’s Why

The Solana Policy Institute has requested the US Securities and Exchange Commission to supply an specific exemption for builders of decentralized finance.

His argument was that the discharge of open-source and non-custodial software program shouldn’t require engineers to imagine the identical regulatory dangers as centralized crypto exchanges or different market intermediaries.

The attraction comes as regulatory stress, enforcement actions, and authorized uncertainty proceed to weigh on DeFi growth within the United States, at the same time as policymakers present a shift away from aggressive enforcement towards clearer guidelines.

SEC Framework Built for Centralized Markets Falls Short for DeFi

In a letter submitted Friday via the SEC’s web site, the nonprofit responded to a December 17, 2025, request for public enter from Commissioner Hester Peirce on how crypto belongings are traded on nationwide securities exchanges and various buying and selling techniques.

The Institute centered on how the SEC can shield the flexibility of people to write down and deploy software program and transact straight via autonomous techniques with out creating pointless regulatory limitations.

It argued that the company’s present framework, constructed round centralized intermediaries, doesn’t match how smart-contract-based techniques really work.

In DeFi techniques, customers retain custody of their belongings, approve their very own transactions, and work together straight with public blockchains. The software program doesn’t maintain funds, train discretion, or act on behalf of customers.

Because these trust-based dangers are absent, the Institute stated, making use of dealer, vendor, trade, or clearing company guidelines to non-custodial software program could be misplaced and counterproductive.

Requiring such software to register as an ATS could be impractical and, in lots of instances, unattainable. In follow, the Institute stated, it might drive decentralized protocols both to close down or to reintroduce centralized management, undermining the very investor protections regulators search to protect.

Crypto Developers Call for Protection as Enforcement Pressure Grows

This push for readability comes towards a backdrop of mounting authorized dangers for builders. In latest years, several high-profile cases have targeted individuals who wrote or maintained open-source software program, together with prosecutions tied to crypto mixer initiatives.

Developers have additionally confronted enforcement actions from the SEC and the Commodity Futures Trading Commission over registration and compliance failures, even when protocols have been designed to function autonomously.

Industry individuals say the shortage of clear exemptions leaves builders selecting between innovation and private authorized publicity.

The Institute’s place aligns with latest public remarks from SEC management.

Chairman Paul Atkins has repeatedly criticized the company’s previous reliance on regulation by enforcement and has argued that engineers should not be subject to securities legal guidelines merely for publishing code.

Commissioner Peirce has equally said that regulators shouldn’t impose obligations on builders who don’t custody belongings or override person choices.

As a sensible path ahead, the Solana Policy Institute advisable a technology-neutral method based mostly on custody and management.

Under this framework, true intermediaries could be regulated as a result of they maintain buyer funds or management execution, whereas builders of non-custodial, non-discretionary software program would stay outdoors registration necessities.

The Institute known as on the SEC to subject interpretive steerage confirming that publishing and sustaining such software program doesn’t quantity to working an trade or effecting transactions for others, and to slim Exchange Act Rule 3b-16 so it clearly excludes passive instruments and interfaces.

The letter lands as Congress and regulators debate broader reforms.

Senators Cynthia Lummis and Ron Wyden recently introduced laws aimed toward shielding blockchain builders who don’t deal with person funds from money-transmitter guidelines.

Meanwhile, the long-running crypto market construction invoice, also known as the CLARITY Act, consists of comparable protections.

Atkins has also said a formal “innovation exemption” might be finalized quickly, providing non permanent regulatory reduction for qualifying initiatives.

The submit Solana Policy Institute Demands SEC Exemption for DeFi Developers — Here’s Why appeared first on Cryptonews.

Similar Posts