DEX volume exceeds tokenized stock trading by $76 billion over 30 days

Andreessen Horowitz and the DeFi Education Fund submitted a joint letter on Sept. 14 asking the SEC to create a rebuttable presumption that decentralized exchanges (DEXs) are not engaged in exchange activity under the Securities Exchange Act. The proposal arrived three days before the SEC issued its Innovation Exemption for tokenized stock venues. That timing suggests the groups are positioning DEXs alongside the emerging regulated infrastructure for tokenized assets. The letter defines the exemption by four technical criteria: the system must be non-custodial, automated without human intermediation, permissionless, and credibly neutral with no hard-coded privileges.

The decisive detail is that the proposal is not architecture-specific. Although written around automated market makers, the submission argues that any DEX meeting the four criteria falls outside the Exchange Act’s registration requirements, regardless of its underlying mechanism. A separate letter from a16z the same day proposes that centralized crypto trading platforms register under a regime modeled on 1998 alternative trading system rules. It requires public Form ATS-N disclosure only above a volume threshold of 5% or more of average daily volume in an NMS stock over four of the preceding six months. Below that line, platforms would disclose conflicts of interest and fair access terms confidentially to the SEC.

Commissioner Hester Peirce’s statement on the Innovation Exemption provides the textual anchor for the proposal. She wrote: “This order is not about decentralized finance. Truly decentralized systems that are driven by automated software do not give rise to the foundational concerns underlying securities regulation, namely that an intermediary you trust to act on your behalf will be foolish, careless, or compromised.” The letter leans directly on that language, arguing that where automated systems raise none of those concerns, the answer is clarity rather than an exemption.

Uniswap Labs disclosed a Wells notice in April 2024, revealing the SEC's probable stance that the platform functioned as an unregistered securities exchange or broker, according to The Defiant. While some questions persist, the Statement reduces uncertainty that has historically constrained the design of wallets, decentralized finance front ends and other crypto infrastructure, as noted by SEC Staff Issues Broker-Dealer Registration Guidance for ..., yet The Defiant highlighted that in her statement on the Innovation Exemption, she wrote: "This order is not about decentralized finance."