SEC Commissioner Hester Peirce has said that software developers who publish open-source blockchain code should not face federal securities registration rules simply because others use their work.
Summary
- Hester Peirce said open-source DeFi code should not automatically expose developers to federal securities registration requirements or intermediary rules.
- Peirce argued that securities violations should rest with unlawful actors, not developers whose public software is later used by others.
- Her remarks followed SEC staff guidance suggesting some DeFi interfaces may not qualify as brokers under existing rules.
SEC Commissioner Hester Peirce, speaking Tuesday at the IC3 Blockchain Camp at Princeton University, said the SEC should not treat code writers as brokers, dealers, exchanges, or other market middlemen when they only release software for public use.
Peirce said many blockchain projects involve open-source software, which she described as activity generally protected by the First Amendment. In her remarks, she argued that responsibility for securities law violations should fall on people who commit unlawful acts, not on developers whose code later appears in financial activity.
Peirce draws Lline between code and conduct
Peirce said decentralized protocols can operate without the same central parties found in traditional finance. In her view, securities laws should focus on conduct by market participants rather than neutral software tools.
The commissioner said the SEC rulebook was built around intermediaries such as brokers, dealers, exchanges, clearinghouses, transfer agents, investment advisers, and investment companies. She warned that applying those categories too broadly could pull blockchain developers and infrastructure providers into rules designed for centralized institutions.
Peirce also questioned whether distributed networks should face securities regulation just because users may access them for token-related transactions. She said blockchain systems support many uses beyond securities activity, which makes automatic classification under market rules difficult.
DeFi front ends face fresh SEC scrutiny
Her comments followed an April staff statement from the SEC’s Division of Trading and Markets on certain crypto user interfaces. According to the SEC staff statement, some interfaces that prepare code for users to interact with blockchain protocols through self-custodial wallets may avoid broker-dealer registration if they meet stated conditions.
The staff statement said such interfaces may convert user-selected transaction details into blockchain-legible commands, provide market data, and show educational material. The staff also said the interface provider’s role matters when assessing whether broker-dealer rules apply.
Peirce’s remarks fit that debate because many DeFi users rely on front-end websites, browser extensions, wallets, and other tools to reach decentralized protocols.
Crypto Task Force reviews existing rules
The SEC’s Crypto Task Force has been reviewing how federal securities laws apply to digital assets, decentralized systems, and market infrastructure. The task force was created as the agency moved away from former Chair Gary Gensler’s enforcement-heavy crypto approach.
SEC Chair Paul Atkins has criticized “regulation by enforcement” and has called for clearer rules for digital assets. Peirce, who leads the task force, has long argued that crypto firms and developers need clearer legal boundaries.
Even as Peirce pushed back against automatic registration duties for code writers, the SEC has kept crypto on its policy agenda. In its draft Strategic Plan through fiscal 2030, the agency said blockchain and crypto asset technologies could reshape America’s financial infrastructure.
