Five Wall Street firms met with the Securities and Exchange Commission’s Crypto Task Force on Tuesday to discuss regulatory approaches to digital assets and decentralized finance (DeFi) and how tokenized securities should be treated under existing federal laws.
According to the SEC memo, published Tuesday, representatives from the Securities Industry and Financial Markets Association (SIFMA), Cahill Gordon & Reindel LLP, Citadel LLC and JPMorgan Chase & Co. the meeting to follow up on recent letters to the commission and its Crypto Task Force.
During the meeting, participants argued that securities should not be allowed to trade under different rules simply because they are issued or traded on blockchain rails, and warned that regulatory shortcuts could allow tokenized stocks or other securities to bypass longstanding investor protection and market structure requirements. They also urged the SEC to rely on formal rulemaking rather than, say, a broad exemption.
The Wall Street firms said they agreed that innovation in digital markets must advance within the framework of investor protection and market integrity. They argued against broad, immediate exemption for tokenized trading activities, saying that tokenization changes the plumbing of the market, not the underlying economic reality of securities. Tokenized instruments, whether issued naturally or through entitlement or “wrapped” structures, were framed as financial equivalents to traditional securities.
The meeting came nearly a month after Citadel released a 13-page letter advising the SEC that DeFi protocols that handle tokenized securities require a closer regulatory grip. The crypto industry immediately responded with its own correspondence, calling the arguments “baseless.”
Citadel’s letter came amid a broader debate over how the SEC should regulate DeFi and tokenized securities, drawing swift criticism from parts of the crypto industry.
DeFi was not a central topic during the meeting and was discussed only to the extent that it raises regulatory issues for trading in tokenized securities, particularly around how exchange, broker-dealer and market access rules may apply to decentralized or hybrid models. Broader DeFi activity, such as lending or management, was not discussed.
Speaking Wednesday at a SIFMA roundtable on 24/7 trading, SEC Trading and Markets Director Jamie Selway said that “some non-equity markets, such as those for digital assets, currently operate 24-to-7,” adding that a “growing consensus among market participants wants equity markets to follow that course.”
Selway said extended hours could strengthen the competitiveness of the U.S. market if implemented with shared infrastructure, common protocols and careful attention to operational risks such as corporate actions.
Overall, the meeting at the SEC reflected increasing convergence between regulators and large financial institutions around a common premise: tokenization can modernize markets, but it does not require a separate regulatory regime.
