In a formal letter to the U.S. Securities and Exchange Commission (SEC)’s Crypto Task Force, Citadel Securities opposed any exemptions that would allow tokenized equities to bypass traditional securities rules.
The investment management firm’s remarks come amid increasing popularity for blockchain-based stocks, with the firm raising concerns over regulatory loopholes in the treatment of tokenized stocks.
The firm emphasized that these digital assets could drain liquidity from the U.S. equity markets and create confusion about who is issuing them. According to Citadel, all stock-like instruments should follow the same regulatory standards, with no shortcuts allowed.
Citadel urged the SEC to avoid fast-tracking exemptions for blockchain-based stocks. The firm suggested a more organized rulemaking process that invites public feedback. This approach would help protect investors and avoid any loopholes in regulations.
“Just because something is labeled as innovative doesn’t mean it gets a free pass,” the firm pointed out. It emphasized that true innovation addresses inefficiencies rather than sidestepping the rules.
SEC Faces Pressure Amid Blockchain Shift
The debate comes as tokenization gains ground across global finance. SEC Chair Paul Atkins admitted that “if it can be tokenized, it will be.” However, he said the agency was still reviewing how far exemptions could go. Meanwhile, Commissioner Hester Peirce confirmed that tokenized stocks still fall under securities law.
Additionally, market analysts are uncertain how tokenized equity markets will handle pricing. TD Cowen’s Jaret Seiberg questioned how “best price” rules could apply on-chain. In traditional markets, trades must occur at the national best price. This may not be feasible in decentralized trading environments.
This comes just days after President Trump signed a stablecoin bill into law: the GENIUS Act. The new law enforces standards for crypto backed by dollars. While praised for boosting trust, Senator Warren said the bill still lacks consumer protections.
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