Trading firm and market maker Wintermute asked the U.S. Securities and Exchange Commission (SEC) to clarify that network tokens aren’t considered securities.
The company told the agency to provide clear rules on whether tokens count as securities to prevent the misuse of securities laws and to support the healthy growth of crypto markets.
Wintermute said that “network tokens,” which are closely connected to how decentralized networks and protocols operate, are essential technical components of blockchain systems.
For this reason, the company argued, they are fundamentally different from financial products or securities. Additionally, Wintermute cited Bitcoin and Ether as examples of tokens that it believes shouldn’t be classified as securities.
Wintermute challenges SEC on token rules
If regulators classify network tokens as securities, traders in the US must follow securities laws for every transaction. This increases costs, reduces liquidity, and drives activity overseas. Additionally, Wintermute wrote:
Such misclassification risks stifling innovation and driving blockchain development and trading activity outside of US markets.
The company said network tokens aren’t securities, even if they’re later traded for profit or used to raise funds. Wintermute said network tokens are similar to commodities, collectibles, or real estate. People can invest in them without those assets being classified as securities.
The company welcomed the SEC’s decision to leave stablecoins, memecoins, and staking outside the securities category. It also urged the regulator to provide the same clarity for network tokens.
Furthermore, Wintermute said that clear rules in these areas will keep US markets competitive, foster open dialogue with regulators, and create the best conditions for adoption and innovation to grow.
Wintermute seeks DeFi growth with SEC
Along with clarifying the rules around network tokens, the company asked the SEC to make sure DeFi can grow alongside centralized markets for tokenized securities.
Wintermute said the agency should empower both avenues to compete. The company said this would promote innovation, improve investor options, and create a global marketplace for tokenized securities.
