tl;dr
Andreessen Horowitz (a16z) and the DeFi Education Fund have urged the US SEC to create a "Safe Harbor" program for decentralized application (dApp) trading platforms. This program would provide regulatory clarity, protecting non-custodial dApp developers from being misclassified as broker-dealers. T...
Andreessen Horowitz (a16z) and the DeFi Education Fund have called on the US Securities and Exchange Commission (SEC) to establish a “Safe Harbor” program specifically for decentralized application (dApp) trading platforms. In a letter dated August 12 to SEC Commissioner Hester Peirce, the groups emphasized that a clear regulatory framework would shield developers of non-custodial user interfaces from being unfairly classified as broker-dealers under current securities laws.
The proposed safe harbor aims to provide much-needed clarity, allowing developers to innovate within the United States without fear of misapplied regulations meant for more traditional financial infrastructures. According to DeFi Education Fund, the focus is on applications that serve as technical infrastructure — enabling users to initiate blockchain transactions and interact with smart contracts independently. Under this framework, platforms would not take custody of user assets, would not exercise discretion over trade execution, nor solicit investments, ensuring that users retain final control over every transaction.
Furthermore, qualifying dApps must operate on blockchain networks or smart contracts that are non-custodial, permissionless, and free of trust dependencies centered on control. This approach sets clear expectations for developers, helping reduce unintentional regulatory breaches. The groups also highlight that decentralization is an evolving process; projects often begin with stricter controls and gradually distribute authority. Imposing stringent rules too soon could force hasty changes, create security vulnerabilities, or stall development.
To address this, a16z and DeFi Education Fund urge regulators to offer flexibility to platforms in transition toward full decentralization. Such a stance would promote adoption of open, non-custodial designs and avoid penalizing teams still managing operational tasks during their maturity phase.
These calls come amid growing legal scrutiny following high-profile cases, such as the conviction of Tornado Cash co-founder Roman Storm for running an unlicensed money transmission business and the detention of an Ethereum developer by Turkish authorities for allegedly enabling misuse of the network. These developments have heightened concerns within the crypto community about the increasing pressure on decentralized protocol developers from global regulatory bodies.