Wintermute asks the U.S. regulator to keep tokens, which decentralized networks use, out of securities regulation. A trading platform says that assets such as Bitcoin, Ethereum along with Solana are technical parts that operate protocols.
Wintermute’s arguments
Network tokens serve a technical use within networks; they do not fit the common idea of a financial security. Wintermute says that the tokens help with transaction checks, consensus safety in addition to governance, and their operational quality makes them different from instruments that aim to cause ideas of money gain from the work of other people.
Regulatory problems for the system
A wide grouping as securities could increase costs, decrease liquidity and move skilled people and companies to other places. The firm warns that if every exchange and every trade had to go through securities regulation — registration plus disclosure rules — operational burdens would rise and entry to on-chain markets would be limited.
Practical results
Compliance costs would rise for exchanges, custodians and market makers. This would likely lead to reduced liquidity as fewer users participate and to relocation risk where projects and infrastructures move to more helpful regulatory systems, weakening domestic competition.
Regulatory setting – Project Crypto and the 2025 framework
The SEC reviews rules to tell tokens that are securities from tokens that are not, considering decentralization and the idea of profit as important parts. Under Project Crypto, the regulator wants to update the old framework and provide ways to assess a token’s economic characteristics, not just its technical shape, in order to clarify enforcement.
What would change if the petition does well
A clear exclusion would allow on-chain operation to continue without every token becoming an investment subject to securities law. This legal certainty would benefit developers, infrastructure providers, and users by preserving the ability to build decentralized financial products without controls that stop innovation.
Wintermute’s petition highlights the regulatory tension between protecting investors and preserving the technical system that supports blockchains. The SEC’s decision will decide whether the U.S. adopts an approach that supports on-chain ideas while maintaining financial oversight or chooses a cautious interpretation that could change the country’s position in the crypto ecosystem.
