DeFi Education Fund + 30+ Org Coalition Urges SEC to Formalize DeFi Broker-Dealer Guidance via Notice-and-Comment Rulemaking

SEC Staff Names MEV a Required Disclosure Topic — DeFi Coalition Demands Formal Rulemaking

On April 21, 2026, the DeFi Education Fund and a coalition of more than 30 crypto organizations submitted a letter to the SEC responding to the agency's April 13 Division of Trading and Markets staff statement on non-custodial user interfaces and broker-dealer registration. The April 13 statement conditionally exempts so-called "Covered User Interface Providers" from broker-dealer registration — but for the first time in U.S. securities law, it explicitly names maximal extractable value (MEV) as a required disclosure topic. The coalition supports the substance of the staff's position but is pushing hard for one thing: convert this temporary guidance into durable notice-and-comment rulemaking before the next administration or enforcement shift undoes it.

What the April 13 Staff Statement Actually Says

The Division of Trading and Markets staff statement carves out a conditional safe harbor for "Covered User Interface Providers" — front-ends and interfaces that route users to non-custodial DeFi protocols without taking custody of assets or exercising discretionary control over order execution. To qualify, CUI Providers must meet specific conduct requirements.

Two of those requirements are directly relevant to execution infrastructure. First, CUI Providers must disclose risks associated with transaction ordering, explicitly citing MEV as an example. Second, CUI Providers are prohibited from accepting payment for order flow from trading venues. These are not vague aspirational principles. They are defined conditions for regulatory exemption.

The staff statement does not carry the force of law. It represents the current Division's interpretation — revocable without notice, without public comment, and without the procedural protections that attach to formal rulemaking under the Administrative Procedure Act. That is the core concern driving the coalition letter.

Why the Coalition's Push for Rulemaking Changes the Calculus

Staff statements are useful. They are also fragile. The coalition letter argues that market participants cannot build compliance infrastructure around guidance that can be reversed or reinterpreted at the next leadership change. The ask is procedurally straightforward: open a formal rulemaking docket, publish a proposed rule, accept public comment, and create a binding standard that survives political transition.

If that rulemaking happens, MEV disclosure moves from informal expectation to codified legal obligation. Any front-end interface interacting with DeFi protocols — wallets, aggregators, swap interfaces, bridge UIs — would need to satisfy an MEV disclosure standard defined in federal regulation. The definition of MEV, the scope of what must be disclosed, and the acceptable form of that disclosure would all become subject to formal legal interpretation.

This is not a hypothetical concern for protocol teams. The payment for order flow prohibition in the same staff statement signals that the SEC is thinking carefully about how value extraction flows between interfaces and venues. MEV is the on-chain analog to that problem. Regulators are connecting those dots.

For compliance professionals, the immediate action item is monitoring the SEC's rulemaking docket for any proposed rule on CUI Provider obligations. If a notice of proposed rulemaking drops, the comment period becomes a critical window to shape how MEV is technically defined — and a poorly drafted definition could sweep in infrastructure that has no meaningful relationship to front-running or order manipulation.

Where Birdai's Infrastructure Fits This Framework

Birdai operates at the layer where MEV is measurable, attributable, and auditable. The MEV Observatory indexes millions of decoded transactions across chains, identifying searcher activity, sandwich attacks, arbitrage flows, and liquidation patterns with block-level precision. That data is directly responsive to what the April 13 staff statement is trying to surface: quantifiable, transaction-level evidence of how ordering risk affects users.

BirdSearch gives compliance teams and protocol operators query-level access to that dataset — enabling the kind of historical disclosure documentation that a formal MEV disclosure obligation would require. If a CUI Provider needs to demonstrate that its interface disclosed MEV risk accurately and in proportion to observed on-chain activity, BirdSearch provides the evidentiary substrate to support that showing.

Birdai Auction, Birdai's block space allocation infrastructure, operates transparently by design. Any formalized MEV disclosure rule that reaches the auction layer — where ordering decisions are made — would need to grapple with how transparent auctions differ from opaque private order flow arrangements. The distinction matters legally, and Birdai's architecture reflects it.

If the SEC formalizes this rulemaking, Birdai will submit a comment letter. How regulators define MEV in a proposed rule will shape compliance obligations across the entire DeFi stack. That definition should be informed by people who have actually analyzed hundreds of identified searchers and understand the structural differences between harmful extraction and legitimate arbitrage.

What to Watch Next

The immediate signal to track is whether the SEC's Division of Trading and Markets opens a formal rulemaking docket responding to coalition pressure. A notice of proposed rulemaking would trigger a public comment period — the first real opportunity for protocol teams, infrastructure providers, and compliance professionals to shape the legal definition of MEV under U.S. securities law. Watch also for whether the payment for order flow prohibition generates parallel scrutiny of block builder relationships and private transaction channels. The April 13 staff statement and the April 21 coalition response together mark the moment MEV entered the formal regulatory vocabulary. The next document to read will be whatever the SEC produces in response.

Source: DeFi Education Fund, "DeFi Debrief: Week of April 20, 2026", published April 21, 2026.