A “crypto user interface” is essentially an app that lets people see their digital currency and send, receive and manage it without needing to understand the blockchain technology that underlies it. Yesterday, the SEC’s Division of Trading & Markets issued a statement that provides a narrow path for certain crypto user interfaces to avoid broker-dealer registration.

The statement includes a detailed list of criteria that the provider of the user interface must satisfy in order to avoid registration. These include operating the interface as a neutral, non-discretionary tool that allows users to handle all aspects of their transactions using objective and transparent parameters. In addition, the provider may charge only fixed fees and may not solicit or recommend trades. Extensive disclosure concerning the provider’s role, fees, conflicts and other matters are also required. (This is definitely the 20,000 ft. overview of the criteria – be sure to read the statement for the details.)

The statement also includes a list of services that will disqualify the provider from relying on the exemption. These include, among other things, negotiating the terms of any transaction, making investment recommendations, handling customer funds or securities, processing trade documentation or taking orders or executing or settling trades.

Commissioner Hester Peirce issued a statement supporting the staff’s actions, but calling for “a more permanent regulatory approach that addresses the broker definition in light of current market circumstances.”

– John Jenkins