a16z Seeks SEC Safe Harbor for Decentralized Exchanges
a16z and the DeFi Education Fund have submitted a proposal to the SEC seeking a safe harbor for qualifying decentralized exchange systems.
The proposed safe harbor, dated September 14th, would create a rebuttable presumption that eligible decentralized exchanges and connected applications are not operating as exchanges under the Exchange Act.
To qualify, a decentralized exchange must be noncustodial, automated, permissionless, and credibly neutral. Connected applications must use objective, independently verifiable pricing and market data, avoid discretionary control over routing, pricing, matching or execution, and restrict developer activity to specified technical functions.
The proposal would cover systems handling securities, including tokenized securities, and is intended to provide regulatory clarity for decentralized finance.