Crypto Market Maker Regulations: Issuer Guide (2026)

Crypto market maker regulations: the short answer

Crypto market makers are rarely licensed as market makers, but the trading they do is regulated almost everywhere. In the United States, the SEC has dropped its attempt to register them as dealers, while federal prosecutors keep charging fake volume as fraud. In the EU, MiCA's market abuse rules cover anyone who trades a token admitted to an EU trading platform, wherever the firm is based, and a license depends on whether the firm deals with clients. For tokenized securities, which is what most real-world-asset (RWA) tokens are, market making is a securities activity that needs a licensed firm and a licensed venue.

This guide is for token issuers and RWA sponsors deciding whether to hire a market maker, and on what terms. It reflects the rules as of 26 October 2026 and is general information, not legal advice.

What a market maker does for a token issuer

A market maker keeps buy and sell quotes on one or more venues, so investors can trade without moving the price far. For an issuer, the service should be measurable: a maximum spread, a minimum depth on each side of the order book and a minimum share of time with live quotes (uptime), on named venues and trading pairs.

Two commercial models dominate:

• Token loan with call options. The issuer lends the market maker an inventory of tokens for a fixed term. The market maker quotes with that inventory and, at the end of the term, returns the tokens or buys them at agreed strike prices. The issuer pays little cash. The market maker earns mostly through the options, which can reward selling into early demand rather than steady two-sided quoting.
• Retainer. The issuer pays a fixed fee and often supplies the inventory (tokens and stablecoins), which stays the issuer's property. The market maker runs the strategy and reports on it. Incentives are clearer and the cash cost is higher; the issuer carries the inventory risk.

What an issuer should never buy is volume. A service priced on traded volume, a target price or "organic-looking" activity describes wash trading, and in the US cases below it was prosecuted as fraud.

United States: registration retreat, prosecution continues

Registration. In February 2024 the SEC adopted a rule that would have required more firms that regularly provide liquidity, including in crypto asset securities, to register as dealers. A federal court in Texas vacated it in November 2024 (National Association of Private Fund Managers v. SEC and Crypto Freedom Alliance of Texas v. SEC), and the SEC withdrew its appeal in February 2025. In March 2025 the SEC also dismissed with prejudice (opens in a new tab) its case against Cumberland DRW, which had alleged that the firm acted as an unregistered dealer in crypto assets. On 17 March 2026, a joint SEC and CFTC interpretation set out a taxonomy under which most crypto assets, including bitcoin and ether, are not securities, while a transaction in a non-security token can still be part of an investment contract; the SEC's August 2026 offering proposal (opens in a new tab) builds on it. That caveat matters most for newly launched tokens, which is where market makers usually receive token loans and options. In Congress, the CLARITY Act (H.R. 3633 (opens in a new tab)), which would require digital commodity dealers to register with the CFTC, passed the House but failed a Senate procedural vote, 49 to 50, on 15 September 2026. For now, a market maker trading tokens that are not securities faces no federal registration requirement for spot trading in them.

Enforcement. The CFTC can still act against fraud and manipulation in commodity markets, and federal prosecutors treat fake volume as wire fraud whatever the token's legal status. In an undercover operation, the FBI created its own token, NexFundAI, and hired market makers to trade it. CLS Global, a UAE-registered firm whose employee described algorithmic self-trades spread across many wallets to hide them, was sentenced in April 2025 (opens in a new tab) to pay $428,059 and to three years of probation, during which it may not take part in US crypto markets. Gotbit, which had created artificial volume for clients since 2018, was sentenced in June 2025 (opens in a new tab): its founder, extradited from Portugal, received eight months in prison, and the firm forfeited about $23 million and must cease to operate. On 30 March 2026, federal prosecutors in California charged ten more people (opens in a new tab) at four market-making firms (Gotbit, Vortex, Antier and Contrarian) with wire fraud; three were extradited from Singapore, two of them chief executives.

Tokenized securities. A firm in the business of buying and selling securities for its own account is a dealer and must register as a broker-dealer unless an exemption applies (Exchange Act sections 3(a)(5) and 15(a)). The SEC's Innovation Exemption (opens in a new tab) of 17 September 2026 relieves certain liquidity providers in permissioned AMM pools for tokenized listed stocks from the dealer definition; it does not reach private placements or RWA tokens. Resales of restricted tokenized securities still need their own exemption; see the US tokenization regulations guide.

European Union: MiCA's market abuse rules reach everyone

Since 30 December 2024, Title VI of MiCA (opens in a new tab) (Articles 86 to 92) has prohibited insider dealing, unlawful disclosure of inside information and market manipulation in crypto-assets. Its reach is wide (Article 86 (opens in a new tab)). It covers any crypto-asset admitted to trading on an EU trading platform, or for which admission has been requested. It applies to acts by any person, not only licensed firms; to orders and trades whether or not they happen on a trading platform; and to conduct in the EU and in third countries. A market maker in Dubai or Singapore quoting a token listed on an EU platform, including through a decentralized exchange, is inside these rules whatever its own license.

Manipulation under Article 91 includes trades and orders that give false or misleading signals about supply, demand or price, or that hold the price at an abnormal level, unless there is a legitimate reason; securing a dominant position over supply or demand; and placing orders that disrupt a platform or create a false signal, for example by starting or exaggerating a trend. Wash trades and layered orders fall within these examples.

Surveillance and reporting. Anyone who professionally arranges or executes transactions in crypto-assets must have effective arrangements, systems and procedures to prevent and detect market abuse, and must report any reasonable suspicion to its national authority without delay (Article 92 (opens in a new tab)). The detail is in Commission Delegated Regulation (EU) 2025/885, in force since September 2025. Whether a market maker trading only for its own account is caught by this duty is not settled: ESMA's consultation treated professional own-account dealers as covered, the final technical standards left the term undefined, and a question on the point (ESMA Q&A 2769 (opens in a new tab)) is with the European Commission. Venues expect surveillance from their market makers either way. ESMA's guidelines for national authorities on supervising market abuse under MiCA (ESMA75-453128700-1039) have applied since October 2025.

Penalties. Member States must be able to impose maximum administrative fines of at least EUR 15 million or 15% of annual turnover on companies, and at least EUR 5 million on individuals, for breaches of Articles 89 to 92, as well as fines of at least three times the profit made or loss avoided, where it can be determined, and temporary bans on dealing on own account for the people responsible (Article 111(5) (opens in a new tab)).

Who needs a license. In an answer given by the European Commission (ESMA Q&A 2293 (opens in a new tab), June 2025), trading against one's own capital with no client relationship needs no CASP authorization, and market making on a trading platform implies no client relationship. Concluding trades with clients from the firm's own capital is the service of exchanging crypto-assets for funds or other crypto-assets, which does need a license. The answer does not deal with the market maker's contract with the token issuer, so whether that relationship is a client service is a question for counsel. A CASP that operates a trading platform may not deal on its own account on that platform (Article 76(5)), so an exchange cannot be the market maker in its own order books. National transitional periods for existing firms ended on 1 July 2026 at the latest (Article 143(3)); check the venue's authorization, and that of any client-facing market maker, in ESMA's register as described in our MiCA compliance guide.

Tokenized financial instruments. MiCA does not apply to a token that is a financial instrument. Market abuse in tokenized securities on EU trading venues falls under the Market Abuse Regulation (EU) No 596/2014. Under MiFID II (opens in a new tab), an investment firm running an algorithmic market-making strategy must quote continuously for a set share of trading hours under a binding written agreement with the venue (Article 17(3)), and regulated markets must have such agreements and schemes to attract market makers (Article 48(2)). An issuer that pays an investment firm to keep liquidity in its shares (a liquidity contract) gets legal certainty only where a national accepted market practice under Article 13 of the Market Abuse Regulation covers it; ESMA's 2021 report (opens in a new tab) lists them in France, Italy, Portugal and Spain.

United Kingdom, Dubai, Singapore and South Korea

• United Kingdom. The UK's cryptoasset regime, including a market abuse regime for cryptoassets, takes full effect on 25 October 2027 under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 (SI 2026/102 (opens in a new tab)). The FCA's final rules (PS26/9 (opens in a new tab), 30 June 2026) require trading platforms, and firms that deal as principal or agent or arrange deals, to prevent, detect and disrupt market abuse; intermediaries report suspicions to the platform, and the largest platforms must share information with each other and monitor on-chain activity. The FCA declined to list market making as a legitimate market practice, saying it is not abusive unless carried out abusively, and its rules give market makers a limited defense to insider dealing (CRYPTO 4.4.14R). Tokenized securities admitted to a UK trading venue already fall under UK MAR.
• Dubai. VARA's Rulebooks version 2.0, issued on 19 May 2025 (opens in a new tab), have bound licensed firms since 19 June 2025. Under Schedule 1 of VARA's Regulations, broker-dealer services include dealing in virtual assets for own account and making a market in virtual assets using client assets, so a firm doing either in or from Dubai needs a broker-dealer licence. Part VIII of the Regulations makes insider dealing, unlawful disclosure and market manipulation Market Offences when committed in Dubai or when they affect the price of a virtual asset there, and VARA's rules require licensed firms to prevent and detect them and to report suspicious orders and transactions, on or off a trading venue, to VARA and the UAE Financial Intelligence Unit (section J, Prevention and Detection of Market Offences (opens in a new tab)).
• Singapore. Since 30 June 2025, a Singapore firm that provides digital token services only to customers outside Singapore needs a licence under Part 9 of the Financial Services and Markets Act, with no transition period. MAS has said it will grant such licences only in extremely limited circumstances (MAS response, 30 May 2025 (opens in a new tab)). The regime covers payment tokens and tokens that are capital markets products.
• South Korea. The Virtual Asset User Protection Act, in force since 19 July 2024 (opens in a new tab), bans unfair trading in virtual assets. On 4 February 2026 the Seoul Southern District Court gave a crypto company's chief executive a three-year prison sentence and a KRW 500 million fine in the first ruling under the Act, for using an automated program to inflate a token's trading volume, according to Korean press reports (opens in a new tab); both sides have appealed.

Tokenized securities and RWA tokens: same job, different rulebook

Most RWA tokens we structure are securities: shares or units of an SPV, notes or fund interests, sold to eligible investors under an exemption and subject to transfer restrictions. Quoting them all day is dealing in securities, the place where buyers and sellers meet is an exchange in legal terms, and each resale needs its own exemption. The crypto model of a token loan plus quotes on a crypto exchange does not fit: most crypto exchanges cannot admit these tokens, and every buyer must pass the eligibility checks before a transfer can settle.

In practice, liquidity for tokenized private securities is built in stages:

1. Distribution first. Secondary trading follows a real investor base, not the other way round; see why distribution beats tokenization.
2. Controlled transfers. Matched or bilateral transfers between eligible investors, checked against the register and the resale exemption before they settle. In our Scroll SAFT case, holders traded SAFT positions on a KYC-gated peer-to-peer market where only verified buyers and sellers could match and the SAFT flows stayed segregated: liquidity without a market maker.
3. A licensed venue with a licensed liquidity provider, once volume justifies it: an ATS in the US, an MTF or DLT market infrastructure in the EU, or a licensed platform in the UAE. The liquidity provider needs permissions for that instrument and that venue. Our rAMM-X case is a permissioned AMM design for tokenized securities that runs KYC, accreditation and jurisdiction checks before each swap, with an El Salvador DASP licensing analysis. The SEC's 2026 Innovation Exemption points the same way: AMM pools for securities are accepted only inside a permissioned venue that meets conditions.

The design work, from transfer rules to the choice of venue and partners, is what we call controlled transfer workflows and liquidity strategy; the legal side runs through legal setup coordination with qualified counsel. The tokenized securities compliance guide covers the transfer controls themselves.

What to put in a market-making agreement

Treat the agreement as a compliance document, not a commercial side letter. In March 2025, Binance said the market maker for the MOVE token had sold about 66 million tokens the day after the token's December 2024 listing, with few buy orders, and made about $38 million; the exchange expelled the firm and froze the proceeds, and the project cut ties with it (The Block (opens in a new tab)). An issuer should not learn from an exchange what its market maker was allowed to do.

Red flags when hiring a market maker

• It sells volume, "trending" placement or a price target.
• It offers to trade from several accounts or through "partner" wallets.
• It wants a token loan with no daily selling cap and no reporting.
• It cannot name its legal entity, licenses or venues, or refuses KYC.
• It asks to be paid in tokens sent to wallets unrelated to the contracting entity.
• It says an offshore registration puts it beyond US or EU law. The cases above show that it does not.

FAQ

Do crypto market makers need a license?

It depends on where they trade and whether they have clients. In the US, there is no federal registration for spot trading in tokens that are not securities, but dealing in tokenized securities requires broker-dealer registration. In the EU, own-account market making on a trading platform with no clients needs no CASP license, while quoting prices to clients from the firm's own capital does. In or from Dubai, dealing for own account is a broker-dealer service that needs a VARA licence. Market abuse rules apply in all of these places either way.

Is wash trading illegal if the token is not a security?

In practice, yes. US prosecutors charge fake volume as wire fraud and conspiracy, which does not depend on the token being a security. In the EU, MiCA prohibits manipulation in any crypto-asset admitted to trading on an EU platform, and South Korea's first ruling under its Virtual Asset User Protection Act concerned volume inflated by an automated program.

Does MiCA apply to a market maker outside the EU?

Yes, for tokens admitted to trading on an EU trading platform or for which admission has been requested. Article 86 applies the market abuse rules to any person, on or off a trading platform, and to conduct in third countries.

Can a token issuer lend tokens to a market maker?

Yes, it is a common structure. The loan amount, term, return, any call options and a cap on net selling should be written into the agreement, reported on and disclosed as counsel advises. Options over tokens can themselves be regulated instruments in some jurisdictions, so have them reviewed before signing.

Does Asset Haus act as a market maker?

No. Asset Haus designs transfer and settlement workflows and the liquidity strategy around them; it is not a market maker, broker-dealer or exchange, and it does not trade tokens. Licensed venues and liquidity providers are engaged by the issuer, with qualified counsel.

Sources

Checked on 26 October 2026.

• SEC, Litigation Release 26276, SEC v. Cumberland DRW LLC (opens in a new tab) (27 March 2025); press release 2026-76 on proposed Regulation Crypto Assets (opens in a new tab), referring to the March 2026 interpretation; press release 2026-90 on the Innovation Exemption (opens in a new tab) (17 September 2026)
• Congress.gov, H.R. 3633, Digital Asset Market Clarity Act (opens in a new tab)
• US Attorney's Office, District of Massachusetts: CLS Global sentenced (opens in a new tab) (2 April 2025) and Gotbit and its founder sentenced (opens in a new tab) (13 June 2025)
• IRS Criminal Investigation, ten foreign nationals charged in an operation targeting cryptocurrency market manipulation (opens in a new tab) (30 March 2026)
• Regulation (EU) 2023/1114 (MiCA) (opens in a new tab): Articles 76(5), 86 to 92, 111(5) and 143(3); article text via ESMA's Interactive Single Rulebook (Article 86 (opens in a new tab), Article 92 (opens in a new tab), Article 111 (opens in a new tab))
• European Commission, MiCA implementing and delegated acts (opens in a new tab), including Delegated Regulation (EU) 2025/885; ESMA, final report on the Article 92 technical standards (opens in a new tab) (17 December 2024) and supervisory guidelines on market abuse under MiCA (opens in a new tab)
• ESMA, Q&A 2293 on proprietary trading under MiCA (opens in a new tab) (answered 6 June 2025) and Q&A 2769 on Article 92 (opens in a new tab)
• Directive 2014/65/EU (MiFID II) (opens in a new tab), Articles 17(3) and 48(2); ESMA, 2021 report on accepted market practices under MAR (opens in a new tab)
• FCA, PS26/9 (opens in a new tab) (30 June 2026); The Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026, regulation 30 (opens in a new tab)
• VARA, Rulebooks version 2.0 (opens in a new tab) (19 May 2025) and section J, Prevention and Detection of Market Offences (opens in a new tab)
• MAS, response to feedback on digital token service providers (opens in a new tab) (30 May 2025)
• Korea Financial Services Commission, Virtual Asset User Protection Act takes effect (opens in a new tab) (17 July 2024); The Financial News, first ruling under the Act (opens in a new tab) (4 February 2026)
• The Block, Binance offboards the MOVE market maker (opens in a new tab) (March 2025)