Citadel Securities Urges SEC to Slow Tokenized Securities Rollout Over Market Risks

Citadel Securities has called on U.S. regulators to delay new rules enabling widespread trading of tokenized securities, warning of potential market disruption and investor confusion. In a letter to the SEC's crypto Task Force, the firm argued that premature adoption could skew advantages toward crypto platforms and drain liquidity from traditional equity markets.

The push for tokenization—converting traditional assets into blockchain-based securities—has gained momentum this year, with offerings from Backed Finance, Gemini, and Robinhood. Proponents highlight benefits like 24/7 trading, fractional ownership, and faster settlements, along with integration into DeFi ecosystems. Citadel remains skeptical, insisting that "tokenized securities must achieve success through genuine innovation, not regulatory arbitrage."

The debate unfolds as SEC Chairman Paul Atkins signals willingness to modernize securities laws for financial innovation. Citadel advocates for any regulatory changes to follow formal rulemaking processes rather than expedited approvals.