Recent strategic moves by two prominent market makers have signaled a potential shift in the US cryptocurrency landscape. Citadel Securities, a heavyweight in traditional finance with a market valuation of $65 billion, has announced plans to venture into cryptocurrency market making. Simultaneously, Wintermute, a well-established crypto-native market maker, is expanding its US operations with new offices and extended services. These developments raise a compelling question: are market makers, which previously retreated due to stringent SEC regulations, preparing for a strong comeback under a new regulatory framework?
Is Regulatory Pressure Easing?
For an extended period, US regulators maintained a strict stance toward the cryptocurrency industry. During the Biden administration, the Securities and Exchange Commission (SEC) adopted an aggressive enforcement approach, classifying numerous crypto assets as securities. This classification required market makers dealing with these assets to register as broker-dealers and comply with securities laws—a process often seen as costly and complex.
This regulatory posture led to multiple high-profile legal disputes. For example, in October 2024, the SEC filed fraud charges against three firms and nine individuals for allegedly manipulating crypto asset markets. The agency accused them of creating an illusion of active trading to lure investors.
In another case from March 2023, the SEC charged crypto platform Beaxy and its executives for operating as an unregistered exchange, broker, and clearing agency. The platform’s founder was also accused of raising $8 million through an unregistered offering of the native token BXY. These actions underscored the SEC’s focus on investor protection but also highlighted the legal risks and compliance burdens facing market participants.
Faced with such ambiguity and strict enforcement, many crypto market makers reduced their US operations or exited altogether. In a 2023 interview, Wintermute noted that due to regulatory uncertainty, they had deliberately limited their US presence and focused instead on Asian and European markets.
However, the regulatory winds appear to be shifting. Since the change in administration in January 2025, a series of pro-innovation policies have been introduced. On January 23, 2025, an executive order was signed to support the responsible development of digital assets and blockchain technology, revoking previous policies and establishing a new digital asset working group.
Moreover, the SEC announced the formation of a dedicated crypto task force led by Commissioner Hester Peirce. The group aims to create a clearer regulatory framework, moving away from regulation-by-enforcement and providing better guidance on asset classification and compliance. These changes are widely perceived as crypto-friendly and are expected to lower barriers to entry, encouraging more participants to re-enter the market.
What Does the Return of Market Makers Mean for Crypto?
The changing regulatory environment is acting as a key that unlocks new opportunities for the US crypto market. The return of major market makers brings both promise and challenges.
Citadel Securities, one of the world’s largest traditional market makers, is planning to enter the crypto market-making space. This marks a significant shift in strategy, largely influenced by the expectation of a more supportive regulatory environment. The firm is expected to join the market maker lists of major trading platforms, initially likely operating from outside the US.
Wintermute, on the other hand, is deepening its commitment to the US market. The company is expanding its over-the-counter trading and derivatives offerings and opening a New York office. Its CEO recently stated that increased institutional adoption and tokenization of assets could drive market liquidity to new heights.
The participation of established players like Citadel and Wintermute is likely to enhance market liquidity, improve trading efficiency, and attract more institutional investors. It also signals growing confidence in the crypto industry’s maturity and regulatory clarity.
Nonetheless, challenges remain. Regulatory boundaries between the SEC and the CFTC are still being defined, and the risk of market concentration is a concern. The entry of large players may intensify competition and reduce opportunities for smaller market makers. Furthermore, incidents like Wintermute’s $160 million hack in 2022 remind the industry that operational risks persist even among leading firms.
The return of these firms is more than a business expansion—it symbolizes a convergence of traditional and crypto finance. As regulatory collaboration replaces avoidance, the market may witness the emergence of a more structured, institutional-grade ecosystem. However, stakeholders must remain vigilant about the centralization risks that may accompany the influx of traditional finance giants.
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Frequently Asked Questions
Why did market makers leave the US in the first place?
Many market makers reduced their US operations due to regulatory uncertainty and aggressive SEC enforcement. Compliance costs were high, and the legal risks associated with trading securities-classified crypto assets were significant.
What has changed in US crypto regulation recently?
The new administration has introduced executive orders supporting digital asset innovation and established task forces to create clearer regulatory frameworks. The SEC has also shifted toward providing more guidance rather than relying heavily on enforcement.
How will increased market maker activity affect liquidity?
The presence of more market makers typically leads to higher liquidity, tighter bid-ask spreads, and better price stability. This can attract more institutional participants and improve overall market quality.
Are there risks associated with the dominance of large market makers?
Yes, excessive market concentration could reduce competition, increase systemic risk, and conflict with the decentralized ethos of cryptocurrency. Regulatory oversight will be important to ensure fair access and competition.
What does tokenization of assets mean for the market?
Tokenization refers to representing real-world assets like commodities or securities as digital tokens on a blockchain. This can unlock liquidity, enable fractional ownership, and create new use cases in lending and trading.
Will these changes benefit retail investors?
Retail investors may benefit from improved market efficiency and more trading options. However, stronger investor protection measures and clear disclosures will be essential as the market evolves.