Wintermute's letter to the SEC: Dealers should be allowed to independently manage on-chain settlement processes, and proprietary trading in DeFi should not require registration

In the latest opinion letter submitted by Wintermute to the SEC's Special Working Group on Crypto Assets, two main claims are clearly stated:

1. Allow self-managed on-chain settlement processes: Wintermute calls on the SEC to explicitly state that regulated dealers should not be considered in violation of rules when conducting on-chain settlements for their own accounts by bypassing traditional clearinghouses. As long as the counterparty can independently manage its wallet and conduct on-chain delivery, and the dealer fulfills its obligations in a timely manner, they should be exempt from the application of the Customer Fund Protection Rule. This approach can significantly reduce intermediary layers and enhance blockchain settlement efficiency.

2. No registration as a dealer for proprietary trading on DeFi: Wintermute emphasizes that engaging in proprietary trading (including providing liquidity) solely on DeFi protocols, without interacting with customers, assuming market-making obligations, providing advice, or custodial services, should be regarded as "traders" rather than "dealers," and therefore should not require registration. This position continues the legal tradition of the "trader exemption" and echoes the judicial trend following the court's repeal of the "dealer rule" in 2024. Wintermute stresses that the current legal context should ensure that innovation coexists with regulation, avoiding the imposition of inappropriate regulatory burdens on the decentralized finance ecosystem.