Andreessen Horowitz and DeFi Education Fund Push SEC for DApp Safe Harbor

Andreessen Horowitz (a16z) and the DeFi Education Fund have submitted a proposal to the U.S. Securities and Exchange Commission (SEC) seeking the establishment of a “safe harbor” for decentralized finance (DeFi) applications [1]. The initiative aims to provide regulatory clarity by exempting certain non-custodial, decentralized platforms from broker-dealer registration requirements under the Exchange Act. The move addresses a key point of contention: while decentralized protocols themselves are typically not subject to broker-dealer rules, the developers and maintainers of apps that interface with them have increasingly been targeted by the SEC under a broad interpretation of securities law [2].

The proposed safe harbor outlines four criteria that a dApp must meet to qualify for the exemption: the underlying protocol must be decentralized, the application must be non-custodial, it must not provide investment recommendations or financial advice, and it must not exercise discretion over user assets [3]. These conditions are designed to ensure that the apps in question function as neutral, permissionless tools rather than intermediaries in securities transactions. By doing so, the proposal seeks to distinguish between traditional financial intermediaries and the inherently open-source and user-centric nature of many DeFi platforms [4].

The timing of the proposal is significant. It follows the recent high-profile legal case against Tornado Cash developer Roman Storm, who was convicted of conspiracy to operate an unlicensed money transmitter business. This case has raised concerns within the DeFi community about the risks developers face for creating tools that enable privacy and user control [5]. a16z and the DeFi Education Fund argue that the current legal uncertainty discourages innovation and puts developers at risk for unintended legal consequences simply for building open, neutral software [6].

Amanda Tuminelli of the DeFi Education Fund emphasized that the proposal is grounded in the understanding that most DeFi apps operate as passive tools, enabling users to interact directly with decentralized networks without intermediation [7]. The safe harbor would not eliminate the need for regulation entirely but would tailor it to the unique characteristics of DeFi. It aims to preserve investor protection while allowing the space to grow without unnecessary regulatory friction [8].

The proposal also highlights the importance of balancing innovation with oversight. By creating a clear and predictable regulatory framework, the initiative could help DeFi platforms such as decentralized exchanges (DEXs), self-custodial wallets, and NFT marketplaces operate with greater legal certainty [9]. Such clarity could also encourage broader adoption of DeFi services by reducing the ambiguity that currently surrounds their legal status.

The DeFi Education Fund and a16z have made it clear that their goal is not to avoid regulation, but to engage in constructive dialogue with regulators to ensure that the legal framework evolves alongside the technology. They stress that the safe harbor would align with the SEC’s mandate to protect investors and maintain market integrity, while also fostering innovation in the DeFi ecosystem [10].

With the SEC currently re-evaluating its approach to crypto regulation, the outcome of this proposal could have significant implications for the future of DeFi in the United States and globally. If adopted, the safe harbor could position the U.S. as a leader in blockchain policy and set a precedent that other jurisdictions may follow. The response from regulators will be closely watched by developers, investors, and policymakers alike [11].

Source:

[1] Decrypt

(https://decrypt.co/334915/a16z-defi-education-fund-want-sec-safe-harbor-for-dex-crypto-wallet-devs)

[2] The

(https://www.theblock.co/post/366646/defi-education-fund-and-a16z-urge-sec-to-create-regulatory-safe-harbor-for-blockchain-apps)

[3] Blockworks

(https://blockworks.co/news/a16z-sec-safe-harbor-apps)

[4] Coinpedia

(https://coinpedia.org/news/a16z-defi-education-fund-propose-safe-harbor-for-defi-platforms/)

[5] Yahoo

(https://nz.finance.yahoo.com/news/a16z-defi-group-pitch-u-090000168.html)

[6] AInvest

(https://www.ainvest.com/news/a16z-defi-education-fund-push-sec-safe-harbor-dapp-developers-2508/)

[7] ChainCatcher

(https://www.chaincatcher.com/en/article/2197263)

[8] Binance

(https://www.binance.com/en/square/post/08-13-2025-a16z-and-defi-education-fund-petition-sec-for-regulatory-safe-harbor-28254844709201)

[9] MEXC

(https://www.mexc.com/news/defi-education-fund-and-a16z-call-on-the-sec-to-create-a-regulatory-safe-harbor-for-blockchain-applications/65058)

[10] Blockworks

[11] Decrypt