SIFMA Urges SEC to Replace Crypto "User Interface" Staff Statement With Formal Rulemaking

SIFMA urged the SEC to turn an April staff statement by the Division of Trading and Markets on crypto-asset trading interfaces into a formal rule.

In a comment letter, SIFMA warned that the statement departs from the longstanding definition of a "broker" and leaves the interfaces outside the SEC's oversight. SIFMA said the statement lets operators of "covered user interfaces" and non-custodial wallets help investors prepare and submit their own transactions in tokenized securities without registering as broker-dealers, subject to disclosure and conduct conditions. SIFMA said allowing such an interface to connect to trading venues, choose which venues to display, handle orders, and collect transaction-based pay - all outside a registered broker-dealer - marked a significant shift from the longstanding reading of the "broker" definition under Exchange Act Section 3(a)(4)("Definitions and application").

SIFMA raised other concerns, warning that the providers would stay outside the SEC's examination and surveillance systems, and that disclosure alone might not protect investors. The association suggested a notification or filing process with periodic compliance attestations. Further, SIFMA said the statement covered only self-custodial wallets and asked the SEC to address registered intermediaries, custodial wallets, institutional use, liability when errors or fraud occur, and how the approach fits market-structure rules such as Regulation NMS, Regulation ATS, and the market-access rule. SIFMA questioned why the change applied only to digital-asset securities, calling that a departure from the SEC's technology-neutral approach.

SIFMA argued that the staff statement carried less legal weight than a SEC rule and could be changed or withdrawn without public input, so it urged the SEC to proceed through notice-and-comment rulemaking.