Wintermute Advocates for On-Chain Settlement Exemptions from SEC Rules

Wintermute Trading, a London-based OTC platform, has called on the U.S. Securities and Exchange Commission to exempt blockchain-based settlement of tokenized securities from legacy regulations. The firm argues that outdated rules, particularly Rule 15c3-3 (the Customer Protection Rule), stifle innovation by forcing unnecessary reliance on traditional banking infrastructure.

In its October submission to the SEC's crypto Task Force, Wintermute emphasized two critical needs: allowing dealers to settle trades directly on-chain without triggering customer protection requirements, and clarifying that liquidity providers on DeFi protocols shouldn't be forced to register as dealers. The firm contends that blockchain-native settlement using digital wallets offers inherent protections that make legacy safeguards redundant.

The push reflects growing tension between decentralized finance practices and securities regulations designed for traditional markets. Wintermute's position suggests that without regulatory flexibility, the potential efficiency gains of blockchain settlement may remain unrealized in institutional markets.