Citadel Securities Urges SEC Caution on Tokenized Securities, Warns of Market Risks
Citadel Securities has formally cautioned the U.S. Securities and Exchange Commission against granting regulatory exemptions for tokenized stocks, arguing such moves could disrupt traditional market liquidity and obscure investor protections. The market-making firm's July 21 letter to the SEC's crypto Task Force emphasized the need for balanced oversight as digital assets intersect with conventional finance.
"Technological innovation shouldn't serve as cover for regulatory arbitrage," said Citadel founder Ken Griffin, dismissing tokenized securities mimicking traditional assets as faux innovation. The firm advocates for clear guardrails that preserve market stability while accommodating blockchain-based financial instruments.
The intervention comes as regulators grapple with defining frameworks for digital securities. Citadel's recommendations highlight the tension between fostering innovation and maintaining the integrity of established markets—a balancing act that will shape crypto's institutional adoption trajectory.