Citadel Securities Urges Caution on Tokenized Securities Rollout

Citadel Securities has called on U.S. regulators to delay the implementation of rules facilitating widespread trading of tokenized securities. The market-making firm warned the Securities and Exchange Commission's crypto Task Force that premature adoption could destabilize traditional equity markets and create uneven advantages for crypto platforms.

Tokenization of stocks and other traditional assets has gained momentum this year, with firms like Backed Finance, Gemini, and Robinhood launching blockchain-based offerings. Proponents highlight benefits such as 24/7 trading, fractional ownership, and faster settlements—features that could integrate these instruments into decentralized finance (DeFi) ecosystems.

"Tokenized securities must prove their value through genuine innovation, not regulatory arbitrage," Citadel asserted in its letter. The caution comes as SEC Chairman Paul Atkins signals willingness to modernize securities laws to accommodate financial innovations like tokenization.