Deciphr Academy
Track 4 · Module 19 · Lesson 1 of 7 · 5 min read

What does a crypto market maker do?

Short answer

A market maker is a firm that stands ready to buy and sell at prices it shows to everyone.1 It earns money from the gap between its buying and selling prices, called the spread.2,3

Buy orders (bids)Sell orders (asks)$1.00$0.99$0.98$0.97$1.02$1.03$1.04$1.05spreadThe market maker quotes both sides
Fig. 1. A market maker shows a buy price and a sell price close together. The gap is the spread.

Bid, ask and spread

Every market has two prices at once. The bid is the highest price a buyer will pay right now. The ask is the lowest price a seller will accept right now.2

The difference between the bid and the ask is called the spread.2 A market maker earns its money from that spread, by buying a little below the price it sells at.3

How we work out a spread as a percentage

Take the gap between the ask and the bid, and divide it by the price halfway between them. If the bid is $0.99 and the ask is $1.01, the gap is $0.02 and the middle is $1.00, so the spread is 2%. The quizzes use this method.

Two prices, all the time

A market maker shows a buy price and a sell price at the same time. In US stock markets, the rules require market makers to keep both prices showing all through the trading day, within a set distance of the best price.4

In regulated US futures markets, a market maker is expected to buy when there are too many sellers, and sell when there are too many buyers.5 Some crypto exchanges run their own market maker programmes with targets like these.6

The risk they carry

Market makers end up holding the tokens they buy. They face inventory risk: the risk of being stuck with something they can't sell.3

Lawful market making

The FBI describes lawful market making as watching trading and prices, trading a company's token to profit from price moves, and related advice.7 Faking trading activity is a different thing. US law prohibits wash trading in commodities markets, and US authorities have charged crypto firms over it.5,8

Our viewA good market maker makes it cheaper and easier for everyone else to trade. You can see its work in the spread: the tighter it is, the less a buyer or seller gives up.
Sources
  1. Market makers (glossary). Investor.gov, US Securities and Exchange Commission.
  2. Ask price (glossary). Investor.gov, US Securities and Exchange Commission.
  3. Market Making: Predatory or Essential?. Presto Research (Min Jung), 10 May 2024.
  4. SEC approves new rules for market maker quoting. US Securities and Exchange Commission, press release 2010-216, 8 November 2010.
  5. CFTC Glossary (wash trading, disruptive trading practice, market maker). US Commodity Futures Trading Commission.
  6. Market Maker Program Terms v1.1. Norwegian Block Exchange (NBX), 20 May 2026.
  7. Affidavit in support of criminal complaint, United States v. Andriunin (Gotbit). US Department of Justice / FBI, 24 September 2024.
  8. SEC charges three so-called market makers and nine individuals in crackdown on manipulation of crypto assets. US Securities and Exchange Commission, press release 2024-166, 9 October 2024.
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General education built from the publicly available sources listed above. Not financial, legal, tax or investment advice. Naming a company, project or regulator is not an endorsement either way. Last checked 2026-10-22. Terms and disclaimer.