SEC’s Peirce Says Publishing DeFi Code Shouldn’t Fall Under Securities Laws

U.S. Securities and Exchange Commission Commissioner Hester Peirce said software developers should not be subject to federal securities laws solely for distributing open-source code.

Cointelegraph reported on June 4 that, in remarks at Princeton University’s IC3 Blockchain Camp, Peirce said developers who publish blockchain and decentralized finance, or DeFi, code should not be treated as securities brokers.

Many blockchain projects involve the publication of open-source software, an activity that is generally protected by the First Amendment, she said. Because decentralized protocols can operate without traditional intermediaries, liability for securities-law violations should rest with the individuals who actually engage in illegal conduct, rather than the people who created the software.

Peirce also said the SEC’s rulebook is largely built around regulating intermediaries, including brokers, dealers, exchanges, clearing agencies, transfer agents and investment advisers. As a result, the digital-asset industry has been boxed into that framework.

She added that it is unclear whether those rules should be extended to blockchain infrastructure itself. Distributed networks are used for far more than securities transactions alone, she said.