The cryptocurrency market is full of twists and turns. Just when investors were being hit by a early morning plunge, two major traditional market makers quietly entered the U.S. cryptocurrency market, bringing a ray of light to the devastated market. The traditional financial industry giant, Citadel Securities, the largest market maker on the NYSE with a market value of $65 billion, plans to enter the cryptocurrency market, betting that former President Trump's support for the crypto industry will bring market prosperity. Meanwhile, the traditional cryptocurrency market maker Wintermute is entering the U.S. market, planning to expand its over-the-counter trading and derivatives business in the U.S. while opening an office in New York. The moves of these two market maker giants serve as a market indicator. Does this mean that market makers, who left the U.S. market due to strict SEC regulation, are now poised to make a strong comeback under a new regulatory framework?

Market Maker Regulation Continuing to Loosen?

For a long time, the U.S. has had a strict regulatory stance on the cryptocurrency industry. During the Biden administration, the SEC took a strict regulatory stance, considering many crypto assets as securities. This means that if market makers are involved with these assets, they must register as broker-dealers and comply with the requirements of securities laws. This requirement has also led to a large number of litigation disputes. For example, on October 9, 2024, the SEC charged three companies and nine individuals who claimed to be market makers with fraud, alleging that they were involved in a scheme to manipulate various cryptocurrency markets by creating a false impression of active trading to induce investors to purchase crypto assets.

Furthermore, on March 29, 2023, the U.S. Securities and Exchange Commission charged the cryptocurrency exchange Beaxy and its executives for failing to register as a national securities exchange, broker-dealer, and clearing agency. The founder of the platform, Artak Hamazaspyan, and his controlled company Beaxy Digital, Ltd., raised $8 million through the unregistered issuance of Beaxy tokens (BXY) and faced charges for the market makers on the platform acting as unregistered dealers. These actions reflect the SEC's strict regulation of cryptocurrency market participants, aiming to protect investors but also increasing compliance costs and legal risks.

Image Source: SEC Website

With such a strict and uncertain regulatory environment, many cryptocurrency market makers have had to reduce their participation in the U.S. market or even exit entirely. Wintermute mentioned in an interview with BlockBeats in 2023: "In 2021, we didn't have any dealings with the SEC at all, so we deliberately decided to register in the UK for spot trading; in the UK, they specifically stated that they do not want to provide derivatives for retail, so we completely avoided this risk by placing our derivatives business in Singapore. But in the U.S., we hardly have any business, as all commercial activities basically occur outside the U.S. So in many respects, we intentionally avoid this issue (SEC regulation), and in fact, we are now more focused on Asia, so we moved to Singapore."

Related Reading:《Interview with Wintermute: We Are Liquidity Providers, Not Market Makers》

However, with the change of administration, the regulatory direction has also shifted along with the attitude of the ruling party. Since Donald Trump took office in January 2025, a series of clear policies supporting the crypto industry have been gradually rolled out. On January 23, 2025, Trump signed an executive order emphasizing responsible growth in support of digital assets, blockchain technology, and related technologies, revoking the Biden administration's relevant policies. The order also established a digital assets working group within the National Economic Council to propose a federal regulatory framework covering market structure, supervision, consumer protection, and risk management.

Furthermore, on January 21, 2025, the SEC announced the formation of a cryptocurrency working group led by Republican Commissioner Hester Peirce. This group aims to develop a comprehensive and clear regulatory framework, moving away from the previously enforcement-heavy approach. The focus is on distinguishing which "crypto assets" qualify as securities, potentially changing the way companies register, and providing clear statements when approving or disapproving exchange-traded products. These changes are seen by the industry as a crypto-friendly signal that is expected to lower compliance barriers and attract more market participants.

Will the Return of Traditional Market Makers Improve the Crypto Market?

The shift in regulatory policy is like a key gradually unlocking the door to the U.S. crypto market, bringing new vitality to the market, along with a series of opportunities and challenges.

Headquartered in Chicago, USA, Citadel Securities was founded in 2002 and is one of the world's largest market makers, mainly involved in trading in areas such as stocks, futures, forex, and bonds. Citadel Securities plans to expand into the cryptocurrency market-making business, marking a significant shift in its previous cautious stance toward the cryptocurrency sector, betting that a favorable regulatory environment during the Trump administration will drive growth in this asset class. The company has plans to join the market-making list of several exchanges, including Coinbase Global, Binance, and Crypto.com, potentially initially setting up market-making teams outside of the United States.

Image of Citadel Securities CEO Ken Griffin

At the Consensus Hong Kong 2025 conference, Wintermute CEO Evgeny Gaevoy stated: "As the United States gradually adopts cryptocurrency, the risk-off sentiment of traditional institutions will ease. The asset tokenization market will reach a size of hundreds of billions to trillions of dollars, and assets will be usable as collateral. In terms of liquidity, increased participation will drive depth. I also hope that regulatory developments in the crypto field will advance market pricing reform." Gaevoy, in an interview with Bloomberg, mentioned that the company's business expansion plans have shifted focus from the Asian market to the United States, expressing a desire for favorable cryptocurrency regulatory policies in the U.S. On February 24, according to Arkham Monitor, Wintermute withdrew 106,885 SOL tokens worth about $16.71 million from Binance in the past 6 hours, leading some to speculate that this move is in preparation for entering the U.S. market.

Photo of Evgeny Gaevoy during an interview at the "Consensus 2025" event

Citadel Securities and Wintermute, a long-standing market maker in the traditional financial sector and a market-making giant with extensive experience in the crypto space, respectively. Their entry undoubtedly will directly boost liquidity in the U.S. crypto market, attract more institutional investors, and potentially drive increased trading activity. Particularly, the participation of traditional financial powerhouse Citadel will help transition the crypto market from a period of "wild growth" to maturity, promoting comprehensive enhancements in liquidity, trading efficiency, and regulatory compliance in the market. This also indicates that with the evolution of U.S. regulatory standards, institutional confidence in the crypto industry continues to strengthen, potentially propelling the U.S. crypto market into a new growth phase.

However, challenges persist, such as balancing industry development support with investor protection, delineating regulatory responsibilities between the SEC and the CFTC, and addressing concerns about the monopolistic tendencies of multiple major market makers. Especially with Citadel Securities' entry, its collaboration with major exchanges will directly squeeze the market share of existing top market makers, further encroach on the survival space of mid-size market makers, and intensify industry competition. Simultaneously, the concentration of market makers will increase, contradicting the decentralized ethos of the crypto industry. Additionally, Wintermute had previously experienced a $160 million on-chain asset hack due to an algorithm flaw (2022 incident), highlighting the systemic risks posed by traditional giants.

The return of Citadel and Wintermute marks the convergence of traditional finance and the crypto ecosystem. As the $650 billion traditional market-making giant enters the game, and Wintermute further bridges the East and West funds, the market is witnessing the process of liquidity transformation. The strategic realignment of the two market-making giants fundamentally represents a shift from "regulatory arbitrage" to "regulatory collaboration." If the U.S. can establish a tiered regulatory system (such as rules based on token type and investor category), it may foster a larger institutional-grade crypto market. However, one must be cautious of the centralization risks posed by the excessive penetration of traditional financial powers— the future crypto market may no longer be about "disrupting Wall Street" but rather "dancing with Wall Street."

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