Wintermute urged the U.S. Securities and Exchange Commission to confirm that network tokens are not securities, arguing they are technical inputs to decentralized networks and should be treated like commodities to preserve liquidity, innovation, and US market competitiveness.
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Clear SEC guidance on network tokens reduces legal uncertainty and protects US market liquidity.
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Classification as securities could increase compliance costs and push trading activity offshore.
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Wintermute cites Bitcoin and Ether as examples and calls for parity across stablecoins, memecoins and staking rules.
Meta description: Network tokens and SEC guidance: Wintermute urges the SEC to exclude network tokens from securities classification—read key impacts and next steps.
What did Wintermute ask the SEC about network tokens?
Wintermute asked the SEC to confirm that network tokens are not securities. The firm argued these tokens are intrinsic technical inputs to decentralized protocols, distinct from financial securities, and that clear agency guidance is needed to avoid misapplication of securities laws and preserve US market competitiveness.
How does Wintermute define network tokens and why do they differ from securities?
Wintermute describes network tokens as assets “intrinsically connected to the functioning of a decentralized network or protocol.” These tokens primarily enable protocol operations rather than representing an investment contract.
Because they serve technical roles—such as routing, staking or governance—Wintermute argues they fundamentally differ from traditional securities, even when traded for profit or used in fundraising rounds.
Trading company Wintermute submitted formal feedback to the U.S. Securities and Exchange Commission requesting explicit guidance that network tokens are not securities. The firm said such clarity is necessary to avoid misapplication of securities laws and to ensure continued growth in digital-asset markets.
Wintermute cited Bitcoin (BTC) and Ether (ETH) as illustrative examples of network tokens that perform core technical functions within their networks and therefore should not be treated like securities.
Why does Wintermute liken network tokens to commodities?
Wintermute argued that, if network tokens were classified as securities, every trade could trigger securities-law compliance obligations in the US. This would likely reduce liquidity, raise transaction costs, and create incentives to migrate trading and development offshore.
“Such misclassification risks stifling innovation and driving blockchain development and trading activity outside of US markets,” Wintermute wrote in its submission.
The company compared network tokens to commodities, collectibles and real estate—assets that can be bought for investment without being automatically regulated as securities solely because they are traded for profit.
How would securities classification affect market participants and DeFi?
Classifying network tokens as securities could impose broker-dealer, registration and custody requirements on platforms and market makers. That would increase operational costs and could reduce market depth for many tokens.
Wintermute also urged the SEC to ensure decentralized finance (DeFi) can grow alongside centralized tokenized securities markets. The firm recommended policies that allow both models to compete, promoting innovation and more investor choices.
Frequently Asked Questions
Will SEC guidance change trading rules for Bitcoin and Ether?
If the SEC explicitly excludes Bitcoin and Ether as securities, trading platforms would avoid securities-specific registration for those assets, helping preserve liquidity and standard trading operations in the U.S.
How can firms prepare for potential SEC classification changes?
Firms should review compliance programs, engage with regulators, and document how specific tokens function within networks to support arguments about non-security status in formal submissions.
Key Takeaways
- Clarity needed: Clear SEC guidance on network tokens would reduce legal uncertainty for market participants.
- Market impact: Misclassification as securities risks higher costs, lower liquidity and potential relocation of trading offshore.
- Policy balance: Wintermute urges rules that allow DeFi and tokenized securities to coexist and compete.
Conclusion
Wintermute’s submission asks the SEC to recognize network tokens as distinct from securities, arguing this will preserve liquidity, encourage innovation and keep US markets competitive. Clear regulatory definitions and comparable treatment across token types will shape whether capital and activity remain onshore or move abroad. Readers should monitor U.S. SEC guidance and industry responses for next steps.
