SEC Offers Conditional Reprieve for Crypto Trading Apps

The US Securities and Exchange Commission (SEC) has taken a significant step towards regulating the cryptocurrency industry by outlining conditions under which crypto trading apps can operate without registering as brokers.

According to the SEC's Division of Trading and Markets, 'Covered User Interface Providers' that function purely as neutral tools rather than intermediaries may avoid broker-dealer registration. This means that providers cannot push specific trades or give investment advice, and any interface showing multiple ways to execute a trade must use objective sorting such as price or speed.

The framework also imposes requirements on fees, which must be straightforward and consistent, not influenced by which assets or routes are chosen. Additionally, if the provider is affiliated with a trading venue, that relationship must clearly be disclosed and treated fairly.

The SEC has stated that while this guidance is not legally binding, it signals staff's enforcement posture and provides interim guidance pending more comprehensive regulatory action. It will sunset after five years unless superseded.