a16z Proposes Safe Harbor for Decentralized Exchanges Under SEC Rules

Andreessen Horowitz's crypto arm, a16z, has proposed a safe harbor for decentralized exchanges (DEXs) under SEC exchange registration requirements. The proposal, submitted with the DeFi Education Fund, would create a rebuttable presumption that certain DEXs and DEX Apps are not engaged in exchange activity under the Securities Exchange Act.

The four qualifying criteria for DEXs include being non-custodial, automated, permissionless, and credibly neutral. Additionally, separate rules would be imposed on applications providing interfaces to DEX protocols, requiring them to remain non-custodial, with users initiating transaction signing and submission.

a16z's proposal follows the SEC's recent action allowing certain Tokenized Securities Venues (TSVs) to operate outside the statutory definition of an exchange for five years. The agency's relief is limited to tokenized NMS stocks traded in permissioned environments.