The Solana Policy Institute (SPI) formally urged the U.S. Securities and Exchange Commission to exempt non-custodial DeFi developers from rules designed for centralized intermediaries.
SPI’s letter delivered advanced three core arguments. First, developers are creators of non-custodial software rather than custodians of user assets, so liability frameworks tied to control and custody — such as Rule 3b-16 under the Securities Exchange Act — do not map cleanly onto permissionless protocols.
Second, the institute said regulatory uncertainty and potential developer liability for user transactions are stifling innovation. Third, SPI warned that treating code authors like centralized platforms risks pushing legitimate development offshore and weakening U.S. competitiveness in digital finance.
The push is being driven publicly by SPI founder and CEO Miller Whitehouse-Levine and President Kristin Smith, who have paired formal filings to the SEC with advocacy for legislative clarity. The institute specifically urged the SEC to issue interpretive guidance that distinguishes custody and control from mere software publication.
Regulatory traction: SEC, Congress and the limits under discussion
The SPI’s campaign aligns with a parallel policy track inside the SEC. Chairman Paul Atkins has indicated an “innovation exemption” for on-chain products is under active development and “could be finalized soon.” That proposal is expected to include guardrails such as investor limits and transaction caps; those parameters remain under negotiation and will determine how protective the safe harbor actually is.
At the same time, Congress has moved on legislative fixes. Senators Cynthia Lummis and Ron Wyden introduced the Blockchain Regulatory Certainty Act on 12 of jan. to shield non-custodial developers from money-transmitter rules. The CLARITY Act — a broader candidate for statutory reform — has its markup delayed until february and will test legislative appetite for a statutory developer exemption.
Investors, developers and policy watchers are now turning their attention to the CLARITY Act markup in late January 2026 and any final action from the SEC; those events will effectively test whether the U.S. will adopt a tailored regime that protects non-custodial developers while imposing meaningful safeguards for users.
For market participants, the outcome will shape where teams build, how protocols are structured, and the legal risk embedded in on-chain code.
