Key Takeaways
- The firm urged the SEC to state explicitly that network tokens such as Bitcoin and Ethereum are not securities, arguing that they would create compliance burdens
- On decentralised finance, the firm said that simply providing liquidity on DeFi platforms should not be treated as broker-dealer activity.
Leading algorithmic trading firm Wintermute has called on the U.S. Securities and Exchange Commission (SEC) to clarify how crypto tokens and broker-dealer activity should be regulated. In a letter submitted on September 3, the company warned that without clearer rules, the U.S. risks losing ground in the rapidly expanding market for tokenised assets.
Taking to X, the firm urged the SEC to state explicitly that network tokens such as Bitcoin and Ethereum are not securities, even if they were initially launched through token sales or remain subject to speculation. According to Wintermute, categorizing such tokens as securities would create compliance burdens that are incompatible with their decentralized design.
“Such misclassification risks stifling innovation and driving blockchain development and trading activity outside of US markets,” it said.
The company also asked for more flexibility in how broker-dealers handle tokenised securities. Its recommendations included allowing them to trade these assets for their own accounts, clear and settle transactions with wallet technology, and custody their proprietary holdings without being constrained by rules designed for customer funds. In its statement, Wintermute argued that these measures would make U.S. markets more efficient and competitive.
“Clear guidance across these areas will keep US markets competitive, encourage continued dialogue with regulators, and create optimal conditions for adoption and innovation to thrive,” the company said.
On decentralised finance, the firm said that simply providing liquidity on DeFi platforms should not be treated as broker-dealer activity. It also cautioned against extending SEC oversight to non-U.S. participants who are not directly soliciting American investors, warning that such an approach could deter international engagement with U.S. markets.
