SEC's Peirce: Permissionless DeFi Doesn't Need a Legal Exemption

SEC Commissioner Hester Peirce said Sept. 17 that investors do not need an exemption to use permissionless smart contracts to trade peer-to-peer. She stressed the view reflects her own position, and any binding SEC definition would require formal Commission action. Peirce noted that neither the SEC's tokenized-securities order nor a separate staff statement defines what "truly decentralized" means. The SEC's Sept. 17 Commission order instead offers temporary, conditional relief for a specified Tokenized Securities Venue that uses automated market maker (AMM) pools to facilitate permissioned trading in Tokenized NMS Stocks. Under the order, a covered venue provides one or more pools and sets access standards. The order outlines conduct that can amount to "provision" or "control" of a pool, including selecting or designating a pool, deploying the trading contract, changing rules or parameters, setting fees, or retaining authority to pause trading. By contrast, merely encoding a whitelist as an administrative task is outside that definition. Separately, an April statement from the SEC's Division of Trading and Markets describes circumstances in which staff would refrain from objecting to certain crypto asset securities interface providers operating without broker-dealer registration under Section 15. The statement is a staff view, carries no legal force, and imposes no new obligations. It will be treated as withdrawn five years after April 13, 2026, absent intervening Commission action. Under the staff framework, covered interfaces assist users in preparing transactions through self-custodial wallets. Users retain their keys, choose or customize transaction parameters, sign transactions, and transmit instructions. When multiple execution routes are available, users must be able to filter or sort them using objective factors and view alternatives where they exist. The software must rely on parameters that are pre-disclosed, objective, and independently verifiable. The staff position does not cover providers that solicit a specific transaction, recommend an investment, hold or access user assets, execute or settle a transaction, or take or route an order. Fee practices are also constrained: a provider may charge a flat fee or a percentage transaction charge only if it is objectively determined, consistently applied, and neutral across products, routes, venues, and counterparties. Payments from another party tied to a transaction's size, value, or occurrence fall outside the position. On the derivatives side, the CFTC's Sept. 17 announcement and Staff Letter 26-25 set out a staff no-action position for qualifying passive software providers that do not register as introducing brokers, and for relevant personnel that do not register as associated persons. The position applies when users transact on a designated contract market (DCM) directly as members or indirectly through a futures commission merchant or introducing broker that is a DCM member. It is based on the facts presented, preserves Commission authority, and can be changed, suspended, or terminated by the Market Participants Division. The CFTC staff position permits a provider to promote particular derivatives, steer users toward specific registered firms, charge transaction-based fees, and receive a share of a registrant's revenue. Providers must allow users to reach the registrant directly and must not custody or control customer property, give explicit buy or sell signals, become affirmatively involved in a particular order, or exercise discretion over routing or execution. Relief is conditioned on disclosures, marketing controls, written undertakings with registrants, recordkeeping, and notices to the Division. Taken together, the SEC and CFTC actions evaluate different forms of retained authority under different statutes and do not create a single federal test for decentralization. A protocol, its governance process, and its frontend can sit at different points along a control spectrum. As a result, Peirce's description of "truly decentralized" remains her own characterization, not a federal legal category.