Clearer guidance could keep U.S. crypto markets competitive
Crypto trading firm and market maker Wintermute has formally urged the U.S. Securities and Exchange Commission (SEC) to clarify that network tokens should not be classified as securities. The company submitted its feedback in response to the SEC’s request for public comment, stressing that regulatory clarity is essential to prevent the misapplication of securities laws and to support the growth of digital assets.
Wintermute described network tokens as assets “intrinsically connected to the functioning of a decentralized network or protocol.” Unlike financial products, these tokens serve as technical building blocks that enable blockchain systems to operate.
Examples include Bitcoin (BTC) and Ethereum (ETH), which the company cited as tokens that clearly function as commodities or utilities rather than securities.
Risks of misclassification
The firm warned that if such tokens were treated as securities, every trade of these assets in the U.S. would fall under securities compliance requirements. This could:
- Reduce market liquidity
- Increase compliance costs
- Drive blockchain activity and innovation offshore
“Such misclassification risks stifling innovation and pushing development outside U.S. markets,” Wintermute argued.
Comparing tokens to commodities
Wintermute likened network tokens to commodities, collectibles, or even real estate—assets that can be purchased for investment without being regulated as securities. The company emphasized that even if tokens are later traded for profit or used in fundraising, their primary role as network enablers remains distinct from investment contracts.
Broader recommendations to the SEC
Beyond network tokens, Wintermute welcomed the SEC’s earlier steps toward excluding stablecoins, memecoins, and staking activities from securities definitions. The firm urged regulators to extend the same clarity to network tokens, saying:
“Clear guidance across these areas will keep U.S. markets competitive, foster continued dialogue with regulators, and create the right environment for adoption and innovation.”
Wintermute’s proposal underscores a growing industry demand for regulatory clarity. By excluding network tokens from securities rules, the SEC could help protect U.S. competitiveness while supporting innovation in blockchain and DeFi.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.