Sidley Austin Analysis: SEC April 13 Guidance Explicitly Leaves MEV Secondary Liability Unresolved for Trading Venues and Systems

SEC's April 13 DeFi Guidance Leaves MEV Secondary Liability Deliberately Unresolved

On April 13, 2026, the SEC's Division of Trading and Markets issued staff guidance on decentralized finance user interfaces — and what it omitted is as consequential as what it said. A detailed client alert from Sidley Austin LLP, published April 21, 2026, identified a critical gap: the guidance expressly does not address potential secondary liability related to MEV and connected trading venues and trading systems. For any infrastructure layer involved in transaction ordering, block building, or auction-based execution for crypto asset securities, that omission is not a reprieve. It is an open file.

What the April 13 Guidance Actually Says — and What It Deliberately Excludes

The SEC staff statement targets DeFi user interface providers operating in connection with crypto asset securities. It establishes broker-dealer obligations for covered entities, mandates specific disclosures, and — critically — prohibits receiving payment for order flow from any source other than the transacting user. That prohibition alone reshapes the commercial model for any frontend capturing value from transaction flow.

But Sidley's analysis draws the sharper line. The guidance explicitly carves out two areas from its scope. First: secondary liability questions connected to MEV and connected trading venues and trading systems. Second: national securities exchange registration obligations. These are not minor technical exclusions. The SEC has left two of the most structurally significant liability questions in DeFi infrastructure entirely for future action — or future enforcement.

The payment for order flow prohibition deserves a precise reading. Under the April 13 framework, covered UI providers cannot receive order flow compensation from third parties. If a searcher, block builder, or auction participant is compensating a frontend or relayer for priority access to user transactions, that arrangement is now squarely in the crosshairs — at minimum for any flow touching crypto asset securities.

Sidley also characterized MEV mitigation disclosures as a mandatory compliance item for covered providers, not a best practice. That framing matters. It means regulators expect covered entities to actively document how they identify, measure, and respond to MEV exposure on behalf of users.

Implications for DeFi Protocols and Execution Infrastructure

The unresolved secondary liability question for "connected trading venues and trading systems" is the phrase every protocol team and infrastructure operator needs to parse carefully. The SEC did not define those terms in the April 13 statement. Sidley's alert flags them without resolution. That ambiguity creates legal exposure that cannot be hedged by simply staying outside the UI layer.

Block builders, validator relays, private order flow auctions, and MEV redistribution mechanisms are all plausible candidates for the "connected systems" framing. If any of those systems facilitate matching, prioritization, or price improvement for trades in crypto asset securities, the exchange registration question becomes live — independently of whether broker-dealer status applies. National securities exchange registration is a distinct regulatory regime with its own obligations, and the April 13 guidance explicitly does not foreclose that analysis.

The practical implication: infrastructure operators cannot assume the UI-layer guidance creates a clean boundary around their liability. The SEC has signaled that MEV-adjacent systems are on the agenda. The April 13 statement is the opening document in that proceeding, not the closing one.

For protocol teams already operating under the assumption that execution infrastructure sits outside securities law reach, Sidley's alert should trigger an immediate compliance review. The mandatory MEV mitigation disclosure requirement for covered UI providers will also create downstream pressure on infrastructure layers — if frontends must disclose MEV exposure, they will need data from the underlying systems to substantiate those disclosures.

Where Birdai's Infrastructure Sits in This Analysis

Birdai's MEV Observatory, BirdSearch, and Birdai Auction operate precisely in the infrastructure layer that Sidley's analysis identifies as legally unresolved. The MEV Observatory maintains decoded transaction data covering millions of on-chain events, with hundreds of identified searchers tracked across execution patterns. That dataset is the evidentiary foundation for the kind of MEV mitigation disclosures the SEC is now characterizing as mandatory for covered providers.

BirdSearch gives protocol teams and compliance professionals query-level access to execution data — the granularity required to actually substantiate a disclosure rather than approximate one. If covered UI providers face mandatory MEV disclosure obligations, the data infrastructure to support those disclosures needs to exist before the compliance deadline, not after.

Birdai Auction operates as an auction mechanism for transaction ordering. The exchange registration question Sidley flags — whether a system constitutes a "facility for bringing together buyers and sellers" — applies directly to auction-based execution infrastructure. Birdai has engaged outside counsel on this specific question. The analysis is active and ongoing.

What to Watch Next

The SEC's April 13 guidance is staff-level. It does not carry the force of a formal rule, but enforcement posture frequently moves faster than rulemaking. Watch for no-action requests from infrastructure operators seeking clarity on the exchange registration question — those filings, if submitted, will define the next round of public record. Watch also for how covered UI providers respond to the MEV mitigation disclosure requirement: the quality and specificity of those disclosures will signal whether the industry is treating this as a compliance obligation or a checkbox. The secondary liability question for MEV systems will not stay unresolved indefinitely. The SEC left it open because it intends to return to it.

Source: Sidley Austin LLP Client Alert, April 21, 2026 — U.S. SEC Clears Path for Decentralized Crypto Asset Security Trading