The U.S. Securities and Exchange Commission (SEC) has laid out criteria under which it may not apply broker registration obligations to some cryptocurrency trading interfaces, prompting expectations that the XRP Ledger (XRPL)-based decentralised finance (DeFi) ecosystem could benefit.

On April 14 (local time), blockchain outlet The Crypto Basic reported that the XRP Ledger is being assessed as aligning with the guidance because it is structured to handle trade execution, order matching and pathfinding at the protocol level.

At the core is the SEC's recent stance distinguishing between interface providers and the parties that actually execute trades. In a statement released on April 13, the SEC said certain providers of "covered user interfaces" such as trading apps or wallet connection services may not have to register as broker-dealers if they meet specified conditions. The criteria could apply to services that do not directly hold user assets and do not execute trades themselves.

That is where the XRP Ledger's structure is drawing attention. Unlike other blockchain ecosystems, the XRP Ledger has a decentralised exchange (DEX) built into the protocol. The DEX includes order books, automated market makers (AMM) and cross-currency routing functions. Developers can build interfaces by connecting to an existing shared liquidity layer rather than building new exchange infrastructure.

XRPL validator Vet called the change "positive news for DeFi on XRP". Vet compared the XRP Ledger's DEX to a "market" where all participants access the same liquidity. It differs, Vet said, from fragmented DeFi services that require separate infrastructure and user acquisition structures for each application.

The structure is also seen as meaningful from a regulatory perspective. On the XRP Ledger, transactions take place directly on-chain and users retain control of their assets. Interface providers do not custody customer assets and do not directly handle trade execution. That is why some see it as fitting the SEC's non-broker category.

As a result, businesses developing wallets, trading interfaces and aggregators on the XRP Ledger have been able to reduce some of the burden of designing services from the outset on the premise of broker-dealer regulation. It has also been cited that they can launch services faster without complex back-end systems, and that users can access markets while reducing reliance on intermediaries.

The criteria have not been finalised as a regulatory change. The SEC specified that the guidance is temporary and could change within 5 years. Even so, it is meaningful for now in that regulatory boundaries have become clearer. Some interpret it as opening room for experimentation for service providers that had delayed entering the market due to the registration burden.

Against this backdrop, the XRP Ledger is drawing attention as a network whose DeFi structure itself aligns relatively well with the new regulatory direction. Its built-in trading functions, non-custodial structure and shared liquidity model are cited as strengths. With regulatory scrutiny intensifying, attention is on whether XRP-based DeFi will lead to an actual expansion of services.

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