Petition to SEC – Safe Harbor for Non-Custodial Wallets and DEXs

Andreessen Horowitz and the DeFi Education Fund formally asked the U.S. Securities and Exchange Commission to create a regulatory “safe harbor” that would exempt certain decentralized app developers from being classified as broker-dealers if they meet specified criteria.

A16z and the DeFi Education Fund submitted the proposal to the SEC on Wednesday, asking the agency to clarify which front-end apps and developer activities would be outside the scope of broker-dealer registration and related securities rules.

The letter would allow apps that meet four core qualities to enter the safe harbor. The app must be non-custodial and not take control of user funds. It may recommend optimizations but cannot execute them without user consent. The app must avoid providing investment recommendations and should generally only interact with protocols that have eliminated operational control or demonstrated a path to decentralization.

Amanda Tuminelli, executive director of the DeFi Education Fund, said the proposal aims to “provide front end developers with guidelines enabling them to build without fear of being scoped into unreasonable requirements.”

The proposal responds to evolving U.S. policy on digital assets. The groups referenced recent federal initiatives aimed at clarifying which crypto products fall under securities laws. They suggested safe-harbor rules could coexist with tailored disclosures and exemptions the SEC is considering under its “Project Crypto” workplan.

Under the plan, some centralized entities that still retain control over an app could qualify for shelter from broker-dealer status if they show a credible path toward decentralization and meet the other required tests. The groups did not propose a specific asset-value threshold for eligibility.

The letter argued that forcing projects to remove operational control prematurely could introduce security risks and hinder development. The request now goes to the SEC staff for consideration.

The letter frames the safe-harbor concept as a way to protect developers of common dapp front-ends while preserving investor safeguards. It asks the agency to lay out clear, technology-aware standards that distinguish routine software interfaces from conduct that regulatory regimes were designed to govern.

A16z and the DeFi Education Fund have been active in U.S. crypto policy debates and previously proposed clarifications for decentralized finance. The SEC has pursued cases against developers tied to certain dapps in recent years.