Wintermute Tells SEC: Keep Network Tokens Out of Securities Rules

TLDR:

• Wintermute asked the SEC to clarify that dealers can self-custody tokenized securities and settle trades onchain with stablecoins.
• The firm urged regulators to confirm that liquidity providers in DeFi should not face mandatory dealer registration.
• It requested the SEC to exclude network tokens from securities classification, citing their dominance in crypto markets.
• Wintermute also sought clarity on non-U.S. parties trading tokenized assets outside the U.S. without SEC jurisdiction.

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Wintermute has called on the U.S. Securities and Exchange Commission (SEC) to provide clear rules for tokenized securities. The trading firm submitted its feedback to the regulator’s Crypto Task Force this week. 

The submission set out requests aimed at giving clarity to market participants. Wintermute argued that current uncertainty limits innovation and deters liquidity providers. The firm emphasized that excluding network tokens from securities rules is crucial for crypto adoption.

Clear Rules for Tokenized Securities and Dealers

Wintermute outlined three areas it believes the SEC must address to keep U.S. markets competitive. 

First, it asked regulators to confirm that registered dealers can operate tokenized securities businesses under principles-based guidance. This would include the ability to self-custody tokenized assets using wallet software, settle trades onchain, and transact with stablecoins or other non-security assets.

The firm explained that such rules would remove hesitation from dealers still uncertain about the regulatory framework. Without explicit guidance, many market participants have held back from fully engaging in tokenized securities trading. Wintermute argued that permission to use these tools would create a workable pathway for expanding tokenized financial markets in the U.S.

The feedback also highlighted that liquidity providers need clarity to build sustainable markets. The firm’s view is that hesitation over self-custody and settlement methods has slowed institutional participation. Wintermute insisted that regulators should confirm these practices are permitted to encourage broader adoption.

According to Wintermute’s post, clear guidance would send a message that the U.S. is open to regulated, blockchain-based securities markets. That, in turn, could push more firms to commit resources to building tokenized trading infrastructure.

SEC Guidance on DeFi and Network Tokens

Another request focused on decentralized finance (DeFi). Wintermute told the SEC that simply providing liquidity in tokenized securities markets should not force registration as a dealer. It argued that adding tokenized securities into DeFi pools or lending them directly on decentralized platforms should be seen as activity that supports open markets.

The firm urged regulators to let decentralized and centralized tokenized securities markets operate alongside each other. By doing so, global liquidity pools could form without driving participants away from U.S. markets. Without this allowance, liquidity providers may avoid DeFi, stifling the development of a worldwide market for tokenized securities.

Wintermute also pressed the SEC to clarify that network tokens should not fall under securities rules. It said network tokens make up most of the crypto market and differ from tokenized securities. The firm pointed out that similar guidance has been issued before for other crypto assets, and extending this to network tokens would create consistency.

Finally, Wintermute asked the SEC to make clear that trading by non-U.S. participants on DeFi markets, when conducted outside the country, should not be treated as U.S. activity. This request aimed to prevent jurisdictional overlap and maintain clarity for global trading.

The full submission, available on Wintermute’s website, closed with a call for ongoing dialogue between regulators and market participants.

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