a16z and the DeFi Education Fund formally proposed to the U.S. Securities and Exchange Commission a safe harbor framework to determine when decentralized exchange protocols and DEX apps fall outside registration requirements under the Exchange Act.

the proposal lays out four objective criteria for DEXs to qualify for safe harbor: no custody of user funds, automated execution of trades without human intermediation, permissionless access, and credible neutrality.

DEX apps must ensure pricing data comes from objective, verifiable sources, avoid central discretionary control over trades, and limit the developer’s role to technical maintenance.

the document is authored by a16z team members David Sverdlov, Miles Jennings, Scott Walker, and Aiden Slavin, who argue Congress didn’t fully address these issues and regulators should provide guidance and exemptions to enable responsible development of decentralized markets in the United States.

the effort is part of a broader SEC Crypto Project aimed at guiding U.S. capital markets toward blockchain technology, noting prior SEC steps such as clarifying UI activities, proposed changes to Regulation NMS Rule 611, and the Innovation Exemption, while arguing these do not cover truly decentralized systems.

in parallel, a16z offered a framework for crypto asset trading platforms that operate as traditional intermediaries, proposing a regime similar to alternative trading systems and suggesting filing with the SEC and FINRA for trading crypto securities.