What To Know:
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Wintermute urged the SEC to permit regulated firms to settle trades directly on-chain without triggering customer-clearing rules.
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The firm said proprietary DeFi trading and liquidity provision should fall under the trader exemption rather than dealer registration.
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Its letter pressed regulators to adapt existing rules to blockchain-based settlement while preserving legal clarity for market participants.
Wintermute, a crypto trading firm, has asked the US Securities and Exchange Commission to clarify rules governing on-chain settlements and proprietary trading in decentralized finance. In a recent opinion letter to the SEC’s Crypto Assets Working Group, the firm set out two concrete requests intended to reduce friction for regulated market participants and preserve legal norms for traders operating solely for their own account.
Wintermute Wants Clear On-chain Settlements
First, Wintermute urged the SEC to confirm that regulated trading firms may settle trades on-chain for their own accounts without triggering rules designed for third-party clearing agents. The firm argued that when a counterparty independently manages its wallet and can accept on-chain delivery, a trading firm that fulfills its obligations in a timely manner should not be treated as providing customer-clearing services. Wintermute said this would exempt such activity from the Customer Funds Protection Rule and would allow dealers to design risk-management practices appropriate to blockchain settlement.
Today, Wintermute followed up with the SEC’s Crypto Task Force after our recent meeting to expand on two key points from our discussion
Both focus on enabling innovation in digital asset markets while preserving regulatory integrityhttps://t.co/MF8sKMyroc
— Wintermute (@wintermute_t) November 18, 2025
Secondly, Wintermute sought assurance that proprietary trading and liquidity provision on DeFi protocols do not require dealer registration. The company called on regulators to treat such activity as the work of a “trader” rather than a “trading firm” when there is no interaction with customers, no market-making obligations toward external parties, no advisory role, and no custody of clients’ assets. The position leans on the longstanding trader exemption and recent judicial decisions, including the 2024 court ruling that vacated portions of the so-called Dealer Rules.
Wintermute’s submission follows a direct outreach to the SEC after an earlier meeting. The firm framed its requests as practical steps to enable industry innovation and also preserve regulatory integrity. Wintermute’s accompanying public commentary noted that current rules were created for market structures with several layers of intermediation. Contrastingly, Blockchain settlement can allow direct settlement between counterparties and thereby reduce unnecessary intermediaries, the company said.
Legal and market analysts said the letter raised a central regulatory tension. It focuses on how to adapt rules created for centralized markets to decentralized infrastructure without compromising investor protections. Some industry lawyers welcomed the clarity sought by Wintermute, saying that the potential efficiency gains and reduction in counterparty risk when direct settlement is used responsibly. Others cautioned that any move to relax obligations must be carefully created to prevent firms from shifting customer assets into lightly regulated channels.
Wintermute described its proposals as consistent with existing law and court precedent. “Regulated dealers should be empowered to develop their own clearance and settlement procedures for tokenized securities, without triggering rules applicable to broker-dealers that provide clearing services to customers,” the firm wrote. The company added that allowing direct on-chain settlement for trades involving counterparties who control their own wallets would support disintermediation and preserve operational safeguards through tailored risk standards.
On the question of dealer registration, Wintermute wrote that proprietary activity confined to a firm’s own account aligns with the trader exemption and should not compel registration. The firm said this approach would maintain consistency with judicial trends and reduce regulatory uncertainty for market participants who provide liquidity on decentralized protocols.
The letter is likely to feed ongoing dialogues at the SEC as the agency evaluates how to apply securities laws to tokenized markets. Regulators face pressure to offer clearer guidance that supports responsible innovation.
Also Read: CFTC Crypto Rules To Complete By Aug 2026; SEC Advances Project Crypto
