Citadel Securities has urged the U.S. Securities and Alternate Fee to proceed cautiously with any initiatives that may speed up the adoption of tokenized securities, warning {that a} hasty method may disrupt current capital markets and marginalize institutional buyers.
The market-making large submitted its suggestions in a proper letter to the SEC’s Crypto Job Power, arguing that any regulatory framework for tokenized securities ought to be developed via a structured rulemaking course of moderately than casual steerage or piecemeal exemptions.
The letter comes as SEC Chairman Paul Atkins continues to specific openness to reforming conventional securities laws to accommodate blockchain-based improvements.
Tokenized securities are digital representations of conventional monetary devices, similar to shares or bonds, that may be traded on blockchain networks. These tokens sometimes don’t grant direct possession of the underlying asset however allow options like fractionalization, on the spot settlement, and round the clock buying and selling.
Advocates argue that the know-how could make monetary markets extra environment friendly and accessible, notably for retail buyers and international contributors.
Nonetheless, Citadel Securities raised issues that the emergence of tokenized markets may create fragmented liquidity swimming pools and erode participation in centralized exchanges and public choices.
The agency emphasised the danger of latest, opaque buying and selling venues that might be off-limits to regulated institutional gamers similar to pension funds, insurance coverage firms, and endowments, whose mandates and compliance necessities might forestall them from participating with blockchain-based platforms.
The agency additionally cautioned that the rising curiosity in tokenization from digital asset platforms may result in a type of regulatory arbitrage, the place newer entrants profit from looser oversight in comparison with established monetary establishments. This, Citadel warned, may finally undermine investor protections and deform aggressive dynamics in capital markets.
The SEC has not supplied a timeline for any choices on tokenized securities, however the situation has gained traction as a part of broader discussions round digital asset regulation. The latest passage of stablecoin laws has added momentum to those conversations, with lawmakers and regulators now inspecting the function of blockchain in conventional finance extra carefully.
Main digital asset platforms, together with Coinbase and Robinhood, have publicly supported tokenization as a option to modernize fairness markets. In contrast, Citadel’s response indicators that a number of the largest conventional buying and selling companies stay skeptical, notably within the absence of clear regulatory guardrails.
Because the SEC weighs whether or not and the best way to allow tokenized securities below current regulation, the divergence in trade views highlights the complexity of integrating blockchain know-how into established monetary techniques with out compromising market construction, transparency, or investor entry.
