SEC Commissioner Hester Peirce drew a sharp line around decentralized finance on Sept. 17. She said investors need no exemption to use permissionless smart contracts for peer-to-peer trading. The SEC and CFTC actions examined here set separate limits on intermediary control.

The unresolved question is how much control a software provider can retain before it begins to resemble a regulated intermediary.

Peirce’s statement expressed her own position. A binding definition from the US Securities and Exchange Commission would require Commission action. The SEC’s tokenized-securities order and a separate staff statement leave her phrase “truly decentralized” undefined. Their specific provisions focus on custody, access, software parameters, fees, recommendations, routing and execution.

Each action operates under a different statute and carries a different legal effect. Together, they show how federal regulators are examining the authority that identifiable providers retain. A unified federal decentralization test remains absent.

The SEC’s Sept. 17 tokenized-securities order is an order of the Commission. It creates temporary, conditional relief for a defined Tokenized Securities Venue, or TSV, using automated market maker pools for permissioned trading in Tokenized NMS Stocks.

A TSV under the order performs two functions: It provides one or more AMM pools for permissioned participants, and it sets standards governing who may access those pools.

The order gives “provides” a functional meaning for that exemption. Selecting and designating a pool can count. Deploying its trading contract, changing its rules or parameters, setting its fees, or retaining authority to pause trading can also establish provision or control. Solely performing the administrative task of encoding a whitelist falls outside that definition.

Automation leaves several consequential choices in human hands. People may still choose the venue, set fees, pause activity or decide who gets in. Peirce placed the order outside decentralized finance and described genuinely permissionless software as a different model. The permissioned venue illustrates why operational powers matter even when smart contracts execute trades.