Solana Policy Institute Urges SEC to Exclude DeFi Developers from Broker Regulations

VADODARA, January 13, 2026 — The Solana Policy Institute, a non-profit blockchain policy organization, has formally urged the U.S. Securities and Exchange Commission (SEC) to distinguish between centralized exchanges and non-custodial decentralized finance (DeFi) software in regulatory frameworks. This latest crypto news highlights a critical push for regulatory precision that could reshape the legal for open-source developers and impact market liquidity across DeFi ecosystems.

Market Context & Background

Underlying this trend is a broader regulatory ambiguity that has persisted since the SEC's initial guidance on digital assets. Market structure suggests that unclear rules create a Fair Value Gap (FVG) in DeFi token valuations, as legal risks suppress price discovery. Historically, similar regulatory pressures have led to liquidity grabs in altcoins, where sudden sell-offs occur as developers preemptively shutter projects. The current environment mirrors the 2021-2022 period when regulatory scrutiny triggered capital flight from DeFi protocols, exacerbating bear market conditions. Consequently, the Institute's intervention aims to preempt a repeat scenario by advocating for a custody-based framework that isolates non-intermediary activities.

Related Developments:

• South Korean regulatory gridlock has driven capital toward overseas crypto ETFs, highlighting global divergence in policy approaches.
• Recent liquidity grabs in municipal tokens underscore the sensitivity of DeFi projects to regulatory uncertainty.

What Happened?

According to the official statement from the Solana Policy Institute, the organization has called on the SEC to publish explicit guidance separating non-custodial software tools from broker transactions. The Institute specifically recommends amending Rule 3b-16 under the Securities Exchange Act to exclude open-source code from the definition of an exchange. This proposal is grounded in a custody and control-based framework, which would differentiate intermediary activities (e.g., centralized platforms holding user assets) from non-intermediary actions (e.g., developers publishing code without asset control). The Institute argues that applying broker regulations to DeFi developers would stifle innovation and misapply legal standards designed for traditional financial intermediaries.

Technical Analysis & Price Action

Solana's price action reflects the market's tentative response to this regulatory development. Currently trading at $142.24, SOL has shown a 24-hour gain of 1.73%, but volume profile analysis indicates thin liquidity near this level. The key Order Block resides between $135 and $140, a zone where institutional accumulation has been observed in recent weeks. Resistance is firmly established at $150, a level that has rejected multiple rally attempts since December 2025. The Relative Strength Index (RSI) sits at 58, suggesting neutral momentum without overbought conditions. A break above $150 would target the next Fibonacci extension at $165, while failure to hold $135 could trigger a retest of the 200-day moving average at $125.

Bullish Invalidation: A daily close below $135 would invalidate the current uptrend structure, indicating renewed selling pressure and potential regulatory overhang.

Bearish Invalidation: A sustained move above $150 with increasing volume would negate the bearish thesis, signaling market confidence in regulatory resolution.

By The Numbers

Why It Matters

This regulatory push matters because it directly impacts the capital allocation calculus for institutional investors. A clear exclusion for DeFi developers would reduce legal liability risks, potentially unlocking billions in institutional capital currently sidelined due to compliance uncertainties. For retail participants, it could enhance protocol security and innovation, as developers operate without the threat of broker-dealer licensing requirements. Conversely, if the SEC rejects this framework, DeFi projects on Solana and other Layer-1 chains may face increased operational costs and legal challenges, leading to a gamma squeeze in derivative markets as hedges are adjusted for higher volatility.

Community Sentiment

Market analysts on social platforms express cautious optimism, noting that the Institute's proposal aligns with the SEC's historical emphasis on custody in enforcement actions. Bulls argue that a favorable outcome could catalyze a re-rating of DeFi tokens, while bears highlight persistent macro risks, such as the Federal Reserve's interest rate trajectory, which could overshadow regulatory developments. According to on-chain data, large wallet holders (whales) have maintained positions, suggesting a wait-and-see approach rather than aggressive accumulation or distribution.

Price Prediction / Future Outlook

Bullish Case: If the SEC adopts the Institute's recommendations, Solana could break above $150 resistance, targeting $165 as DeFi protocol valuations expand. Increased developer activity and institutional inflows would support a sustained uptrend, with a 12-month target of $200 based on historical post-regulatory clarity rallies.

Bearish Case: Should the SEC maintain a broad interpretation of broker regulations, Solana may face selling pressure, breaking below $135 support and testing the $125 level. Legal uncertainty could trigger a liquidity grab in altcoins, with SOL underperforming Bitcoin in a risk-off environment. A worst-case scenario involves a drop to $110, the 0.618 Fibonacci retracement from the 2025 high.