a16z And DeFi Education Fund Propose Safe Harbor To Exempt DEXs From SEC Exchange Rules

Proposal Seeks Clarity for Decentralized Exchanges

Andreessen Horowitz (a16z) and the DeFi Education Fund asked the Securities and Exchange Commission to define when decentralized exchanges fall outside the exchange registration requirements of the Securities Exchange Act. The two groups submitted a joint letter to Commissioner Hester Peirce on September 14 proposing a safe harbor that would create a rebuttable presumption that decentralized exchange protocols and their front-end apps are not exchanges under the law.

The request tests how far the SEC's tokenized-securities work reaches software that has no operator. The proposal asks for SEC staff guidance first, then formal rulemaking to codify the standard. The SEC would keep the ability to rebut the presumption for a system that meets the criteria but introduces intermediary risk anyway.

Four Tests for Decentralized Exchanges

Under the proposal, a decentralized exchange would need to meet four requirements. It must be non-custodial, meaning all signing and transaction submission is initiated by the user. It must be automated, executing without human intermediation and without any person or group able to alter the system's functionality or rules. It must be permissionless, with no party able to restrict access. And it must be credibly neutral, granting no hard-coded privileges that let anyone discriminate between users or use cases.

A decentralized exchange app would also need to be non-custodial and source pricing from pre-disclosed, objective and independently verifiable parameters. The app must exercise no discretion over trade coordination, pricing, matching or execution. Developer activity would be limited to interface maintenance, technical and security updates, and objective asset filters based on publicly disclosed criteria.

Commissioner Peirce's Position

The proposal leans on language from Commissioner Hester Peirce herself. In her statement on the Innovation Exemption the SEC issued on September 17, she wrote that truly decentralized systems driven by automated software do not give rise to the foundational concerns underlying securities regulation, namely that an intermediary trusted to act on someone's behalf will be foolish, careless, or compromised.

The groups argue that where automated systems raise none of those concerns, the answer is clarity rather than an exemption.

a16z Also Proposes Rules for Centralized Platforms

In a separate letter filed the same day, a16z alone asked the SEC to let centralized crypto asset trading platforms register with the Commission and FINRA under a regime modeled on Regulation ATS, the 1998 alternative trading system rules. The letter asks to permit them to trade crypto asset securities, non-security pairs, and security/non-security pairs.

The proposal sets a volume threshold of 5% or more of average daily volume in an NMS stock over four of the preceding six months before requiring full public disclosure. Below that threshold, a platform would disclose conflicts of interest, core operations and fair access terms to the SEC and subscribers confidentially. Recordkeeping would track order timing, execution prices and counterparty identities.

What Is Confirmed

• a16z and DeFi Education Fund submitted a joint letter proposing a safe harbor for decentralized exchanges
• a16z submitted a separate letter proposing an ATS-style registration regime for centralized platforms
• Both letters are dated September 14, 2026
• Three days later, on September 17, the SEC issued its Innovation Exemption for tokenized stock venues
• The exchange question has been live since April 2024, when Uniswap Labs disclosed a Wells notice
• The SEC closed its Uniswap investigation without action in February 2025

Why This Matters

The proposals come after the Senate rejected cloture on the CLARITY Act 49-50 on September 15, failing to advance crypto legislation. SEC Chairman Paul Atkins and CFTC Chairman Michael Selig said they would write crypto rules without the bill.

Decentralized exchange protocols currently process significant volume. DEX spot volume ran at $11.07 billion over 24 hours and $266.51 billion over 30 days according to DefiLlama data. Uniswap led at $3.19 billion, ahead of PancakeSwap at $1.13 billion.

The submission is written around automated market makers but is not architecture-specific, according to a16z's article published under the bylines of David Sverdlov, Miles Jennings, Scott Walker and Aiden Slavin. Jennings is a16z crypto's head of policy and general counsel.

Sources

• The Defiant

Read also: SEC Chief Crypto Counsel Outlines Path for Digital Asset Custody Rules