- Citadel Securities has urged the US SEC to proceed more slowly on allowing tokenized securities.
- The firm warns that a rushed approach could lead to investor confusion and “self-serving regulatory arbitrage.”
- Citadel argues tokenization should advance through a formal rule-making process, not ad-hoc measures.
Citadel Securities, one of the world’s most influential market-making firms, is calling on the US Securities and Exchange Commission (SEC) to adopt a more cautious and deliberate approach to the burgeoning field of “tokenized” securities.
The firm has warned that a hasty embrace of this new technology could lead to investor confusion and create an uneven playing field for traditional exchanges and publicly traded companies.
This call for a go-slow approach comes as SEC Chairman Paul Atkins has recently spoken about streamlining traditional securities rules to make it easier for companies to offer tokenized securities.
A tokenized security is a digital representation of a traditional asset, like a stock, that can be traded on a blockchain network rather than through a conventional brokerage account.
By digitally dividing assets into smaller pieces, tokenization can make high-value stocks and other investments more affordable and accessible to a wider range of investors.
In a comment letter sent on Monday to the SEC’s Crypto Task Force, Citadel Securities argued that the race to innovate should not come at the expense of market integrity.
“Tokenized securities must achieve success by delivering real innovation and efficiency to market participants, rather than through self-serving regulatory arbitrage,” the market-making firm stated in its letter.
Instead of allowing tokenization to advance through ad-hoc measures or interpretations of existing rules, Citadel Securities insists that the SEC should move forward only through a formal, comprehensive rule-making process.
When asked for a response, an SEC spokesperson said the agency declined to comment “beyond what the chairman had said publicly on this topic.”
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