SEC Staff Guidance on Broker-Dealer Registration for Crypto Covered User Interfaces

April 20, 2026

Weekly Blockchain Blog - April 2026 #3

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Crypto and Traditional Financial Markets Converge Through Tech Integrations

By Robert A. Musiala Jr.

A major European bank recently announced “its collaboration with Consensys, the leading blockchain and Web3 software company, to expand global access to its USD CoinVertible stablecoin through integration with MetaMask, the world’s leading self-custodial Web3 wallet.” According to a press release, the partnership “marks a significant milestone in bridging traditional finance and Web3 infrastructures” and “will ensure the listing of the MiCA-compliant USD CoinVertible among a shortlist of stablecoins within the MetaMask wallet.”

In related news, Tether, the issuer of the USDT stablecoin, recently announced the launch of tether.wallet, “a self-custodial digital wallet that brings Tether’s global financial infrastructure directly into the hands of its users.” In a blog post, the company noted that “As of March 2026, Tether’s technology is used by more than 570 million people globally, with adoption continuing to accelerate.” According to the blog post, “tether.wallet offers the only assets that truly matter for most of the people: digital dollars via USD₮ and USA₮, gold via XAU₮, and Bitcoin.”

In another recent development, crypto payments company MoonPay announced an integration with Paysafe, “a global payments platform that processed $167 billion in transactions in 2025.” According to a press release, “The integration embeds stablecoin rails directly into Paysafe's platform, giving merchants crypto payment capability alongside cards, digital wallets, eCash, bank transfers, and local payment rails.”

And in a final notable item, a major global payments company recently announced that it has “joined the Tempo network as an anchor validator, supporting transaction validation and accelerating the development of onchain payment infrastructure.” According to a company blog post, the move underscores the company’s role in “shaping stablecoin payments” and “commitment to running critical blockchain operations in-house.”

For more information, please refer to the following links:

• SOCIETE GENERALE-FORGE PARTNERS WITH CONSENSYS TO EXPAND GLOBAL ACCESS TO ITS USD COINVERTIBLE STABLECOIN INTO METAMASK, THE WORLD’S LEADING WEB3 WALLET
• Tether Launches tether.wallet, the People’s Wallet, Extending Its Global Financial Infrastructure Directly to Billions of Users Left Behind by the Traditional Financial System
• Paysafe Taps MoonPay to Bring Crypto Payments to Its $167 Billion-a-Year Platform
• [] Launches Validator Node on Tempo Blockchain

Crypto Companies Announce DeFi Integrations

By Robert A. Musiala Jr.

A major digital asset infrastructure company recently announced the launch of Earn, “a native onchain lending feature” built directly into the company’s infrastructure platform. According to a press release, through the new Earn feature, “institutions can supply stablecoin balances to two leading lending protocols,” Morpho and Aave, thereby “introducing institutional security and governance controls for DeFi lending operations.”

In a related development, crypto exchange eToro recently announced “an agreement to acquire Zengo, the leading self-custodial crypto wallet provider.” According to an eToro blog post, “The acquisition will bring together eToro’s global multi-asset platform and distribution with Zengo’s non-custodial wallet technology, supporting Zengo’s next phase of growth while expanding eToro’s digital asset capabilities.”

For more information, please refer to the following links:

• [] Launches Earn, Giving Institutions Native Access to Onchain Lending
• eToro Expands Self-Custodial Crypto Capabilities with Zengo Acquisition

SEC Staff Statement Addresses Registration for Crypto ‘Covered User Interfaces’

By Om M. Kakani

On April 13, the staff of the Securities and Exchange Commission’s (SEC) Division of Trading and Markets issued a statement addressing the application of broker‑dealer registration requirements under Section 15(a) of the Securities Exchange Act of 1934 to certain software interfaces used in connection with transactions in crypto asset securities and when those interfaces would not require broker‑dealer registration.

The statement clarifies that it addresses only the use of Covered User Interfaces in connection with crypto asset securities transactions. The statement defines a “Covered User Interface” as “an interface provided by a website, browser extension, or other software application (e.g., mobile application) that may be embedded in a wallet or separately available for download, designed to assist users engaging in user‑initiated crypto asset securities transactions on blockchain protocols (or blockchain‑based smart contracts) utilizing the user’s self‑custodial wallet.”

The statement explains that Covered User Interfaces enable users to interact with blockchain protocols by converting user‑identified transaction parameters – such as whether to buy or sell, transaction size, the relevant crypto asset security, and price or price range – into blockchain‑legible commands. These commands are then signed and transmitted through the user’s self‑custodial wallet. Covered User Interfaces may also provide users with market data.

The statement provides an extensive description of the circumstances under which, based on the staff’s view, a person creating, offering or operating a Covered User Interface would not be required to register as a broker‑dealer. Some of the more notable circumstances include those in which the Covered User Interface provider:

• Limits its activity to assisting users in preparing transactions that the users themselves initiate and control
• Limits its activity to technical facilitation rather than discretionary or intermediary functions
• Provides general investor education regarding how the interface operates, enabling users to set transaction parameters, and translates those parameters into executable blockchain instructions
• Connects users to trading venues or liquidity sources for potential execution of transactions
• Displays market data related to crypto asset securities transactions, such as pricing and potential execution routes, provided such information is presented without commentary or recommendations
• Provides potential execution routes, asset prices and estimated transaction costs such as gas fees
• Does not negotiate transaction terms on behalf of users or handle the execution or settlement of transactions The statement requires Covered User Interfaces to clearly disclose their roles, fee structures, availability of assets, cybersecurity practices, potential conflicts of interest, and policies/procedures related to cybersecurity and protecting users from fraud or fee manipulation. The statement also requires Covered User Interfaces to establish policies, procedures and controls to evaluate, onboard and periodically assess connected trading venues and default transaction parameters.

The statement prohibits Covered User Interfaces from soliciting investors to engage in any specific crypto asset securities transactions; acknowledges that Covered User Interface providers may charge users “fixed charge” fees, including transaction‑based fees, in connection with approved activities; and provides a list of specific Covered User Interface activities to which the statement does not apply.

The statement “is part of an effort to provide greater clarity on the application of the federal securities laws to activities involving crypto asset securities” while the SEC continues to consider regulatory issues relating to crypto asset securities and the feedback it has received. The statement expressly does not constitute a rule, regulation or commission-level action. Absent intervening action by the SEC, the statement will be considered withdrawn five years from April 13, 2026.

For more information, please refer to the following link:

• Staff Statement Regarding Broker-Dealer Registration of Certain User Interfaces Utilized to Prepare Transactions in Crypto Asset Securities

Competing Reports Address Stablecoin Yield Prohibition, Effect on Bank Lending

By Ariana Dindiyal

A recent report from the U.S. government addresses certain provisions of the GENIUS Act related to offering interest or yield to stablecoin holders and the expected effects on bank lending. The report states that the GENIUS Act “prohibits stablecoin issuers from offering any form of interest or yield to stablecoin holders, but does not explicitly prohibit affiliate or third-party arrangements that might offer interest-bearing products.” The report notes that “[s]ome variants of the proposed CLARITY Act would close this channel” and prohibit stablecoin interest or yield from being paid through such affiliate or third-party arrangements.

According to the report, one rationale for this prohibition is the concern that if stablecoins were to offer competitive returns, it may cause people to shift their dollars out of traditional bank accounts and into stablecoins, thereby reducing traditional bank lending. The U.S. government report disputes this rationale and presents an analysis finding that “a yield prohibition would do very little to protect bank lending, while forgoing the consumer benefits of competitive returns on stablecoin holdings.”

Shortly after publication of the U.S. government report, a major bank trade association published its own report criticizing the framing of the issue in the government report. According to the trade association report:

“The live policy concern is not whether prohibiting yield on payment stablecoins would impact bank lending. It is whether allowing yield on payment stablecoins would encourage deposit flight – especially from community banks – thus raising banks’ funding costs and reducing local lending. By focusing on the effects of a prohibition, the [report] risks creating a misleading sense of safety by avoiding the much more consequential scenario: yield-paying payment stablecoins scaling quickly.”

According to the trade association, the prohibition on yield for payment stablecoins is a prudent safeguard, as the policy “will allow stablecoins to mature as a payments innovation rather than as an economically risky substitute for insured bank deposits.”

For more information, please refer to the following links:

• Effects of Stablecoin Yield Prohibition on Bank Lending
• The CEA studied the wrong question on stablecoin ‘yield’ and community banks

DOJ To Compensate OneCoin Victims; USSS Action Targets ‘Approval Phishing’

By Amos Kim

The U.S. Department of Justice (DOJ) recently announced the beginning of a remission compensation process to provide recovery for victims of an international investment scheme involving OneCoin Ltd. According to the DOJ press release, between 2014 and 2019, the co-founders of OneCoin and others orchestrated a cryptocurrency scheme that defrauded investors of more than $4 billion worldwide. The DOJ pursued criminal forfeiture of property derived from the fraud proceeds, making more than $40 million in forfeited assets available for victim compensation. The press release notes that individuals who purchased the fraudulent OneCoin cryptocurrency during that period may be eligible for compensation and must file a petition by June 30. The remission process is managed by the DOJ Criminal Division's Money Laundering, Narcotics and Forfeiture Section.

Separately, the U.S. Secret Service recently announced the results of Operation Atlantic, a multinational law enforcement campaign targeting cryptocurrency “approval phishing” scams. According to the press release, the operation disrupted more than $45 million in losses, freezing more than $12 million transferred from victims’ crypto wallets to provide restitution and identifying another $33 million suspected of being linked to fraud schemes. The press release notes that investigators identified more than 20,000 cryptocurrency wallet addresses linked to victims in more than 30 countries and directly contacted more than 3,000 account holders to educate them and revoke unauthorized users’ access. The operation was conducted by the Secret Service, the U.K.’s National Crime Agency, the Ontario Provincial Police and the Ontario Securities Commission, with participation from private-sector partners including several crypto exchanges that assisted in disrupting more than 120 web domains used by scammers.

For more information, please refer to the following links:

• Justice Department Announces Compensation Process for OneCoin Fraud Victims With Funds Recovered Through Asset Forfeiture
• Multi-National Operation Atlantic Targets "Approval Phishing," Identifies $12 Million in Stolen Cryptocurrency

Crypto Hacks Continue, Ethereum Foundation Establishes Security Program

By Keith R. Murphy

According to a recent report, a cross-chain interoperability protocol exploit enabled an attacker to mint 1 billion bridged Polkadot tokens in a single transaction on Ethereum, netting the attacker approximately $237,000. As noted in the report, the “exploit is notable because [the protocol] has marketed itself as a proof-based interoperability layer built to deliver ‘full node security’ for crosschain bridges.” Various cybersecurity entities weighed in on the likely causes of the exploit, including that the attacker used a forged message to alter the admin of the Polkadot token contract on Ethereum, as discussed in the report.

Another report notes recent crypto theft activity of at least $9.5 million from more than 50 victims in connection with a bogus version of Ledger Live, which reportedly was distributed via the official marketplace of a leading technology company. According to the report, on-chain analysis shows that the stolen funds were rapidly moved through a series of transactions into more than 150 deposit addresses at a major crypto exchange as well as a centralized crypto mixing service. The fake listing has been removed from the technology company’s app store, according to the report.

In counterpoint to news of multiple hacks, a separate report highlights the Ethereum Foundation’s joint initiative to subsidize security audits for blockchain developers. In creating the Ethereum Security Subsidy Program, the Foundation reportedly has partnered with a digital asset advisory firm to tap its audit marketplace, allowing Ethereum builders to connect to approximately 20 professional audit firms. As noted in the report, the subsidy program makes important and often expensive security audits more accessible, thereby strengthening the Ethereum ecosystem. The Foundation, which is providing $1 million to support the program, noted that “the program will explicitly support projects dedicated to CROPs, or censorship resistance, open source, privacy, and security values,” according to the report.

For more information, please refer to the following links:

• Hyperbridge attacker mints 1B bridged Polkadot tokens in $237K exploit
• Fake ledger app on [] drains $9.5M across multiple chains
• Ethereum Foundation launches $1 million crypto security subsidy, providing access to over 20 audit firms [View source.]

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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