Key Takeaways
- •Wintermute is asking the U.S. Securities and Exchange Commission (SEC) for clearer regulations regarding decentralized finance (DeFi) trading.
- •The company wants traders who settle on-chain autonomously and do not handle customer funds to be exempt from broker-dealer registration rules.
- •This move could potentially influence liquidity in DeFi markets.
Wintermute has officially urged the U.S. SEC to reconsider regulatory requirements for traders settling on-chain autonomously, arguing against the need for broker-dealer registration in decentralized finance.
This advocacy highlights a push for regulatory clarity, potentially impacting DeFi markets, trading practices, and compliance costs, with no immediate market reactions observed yet.
Wintermute's Proposal to the SEC
Wintermute urges the U.S. SEC to confirm that traders settling on-chain without handling customer funds should not be regulated under traditional broker-dealer rules. The company emphasizes proprietary trading’s independence from direct customer interaction.
The appeal comes as Wintermute, led by Evgeny Gaevoy and operating globally, submits detailed recommendations to the SEC. It seeks clarity on how DeFi trading aligns with U.S. regulatory frameworks.
Potential Impact on DeFi Markets
The recommendations, if enacted, could encourage greater market participation and innovation. DeFi liquidity providers might face reduced compliance costs, potentially transforming current market dynamics significantly.
Wintermute's proposal points to possible shifts in market access. The outcome could drastically influence the liquidity provision landscape, notably for tokens like ETH and BTC used in DeFi protocols.
Regulatory Landscape and Precedents
Regulators' response remains under evaluation, with no immediate SEC decisions published. The DeFi community continues rallying for clearer guidelines amid rising regulatory scrutiny worldwide.
Should Wintermute’s proposal gain approval, it might set precedents similar to the 2024 repeal of the U.S. “dealer rule.” It underscores the potential for evolution in DeFi regulatory frameworks based on historical parallels in securities trading.
Quote from Wintermute Leadership
Wintermute urges the SEC to affirm that broker-dealers may trade tokenized securities for their own account, self-clear and settle such trades, and custody proprietary positions using wallet software, without triggering customer protection rules. — Evgeny Gaevoy, Founder & CEO, Wintermute