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>>Advise the US SEC Crypto Task Force to prioritize minimizing negative impacts when dealing with Miner Extractable Value (MEV).

Advise the US SEC Crypto Task Force to prioritize minimizing negative impacts when dealing with Miner Extractable Value (MEV).

crypthub

4/21/2025, 5:28:06 PM

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Paradigm's Response to the SEC on MEV

Paradigm, a crypto venture capital firm, has submitted a paper responding to the SEC's inquiry regarding Maximal Extractable Value (MEV). The paper, co-authored by Alexander Grieve and Rodrigo Seira, argues that regulatory intervention in MEV could negatively impact the crypto industry and disrupt a market still in development. Paradigm emphasizes the importance of a tech-neutral and flexible approach from regulators to foster innovation while preserving decentralization. The firm believes the market itself is capable of addressing challenges related to MEV.

Market-Driven Solutions and Legal Considerations

Paradigm acknowledges that certain aspects of MEV can create negative outcomes, like traders experiencing price slippage or profit extraction through network transparency. However, the firm posits that ongoing technological advancements are consistently providing solutions to mitigate these issues. The paper also clarifies that even MEV transactions unlikely to meet the legal standards for market manipulation or insider trading, and can even align with principles of best execution.

Recommendations for the SEC

Paradigm proposes two key considerations for the SEC’s approach to MEV. Firstly, the SEC should consider opt-in disclosure guidelines for DeFi frontends seeking to attract SEC-registered company trading activity. Secondly, guidance should be issued to clarify if registered exchanges can operate blockbuilders on Layer-1 networks, preventing centralization and conflicts of interest. The firm stresses the importance of allowing the baselayer markets to continue evolving neutrally to ensure accessibility and innovation. ```