One of the world's largest market makers, Citadel Securities, urges the SEC to regulate tokenized stocks rigorously

On July 23rd, one of the world's largest market makers, Citadel Securities, recently made a plea to the U.S. Securities and Exchange Commission (SEC) to impose equivalent regulations on tokenized stocks and traditional stocks. In a letter sent to the SEC's Crypto Asset Working Group this week, the company stated that regulators should refrain from granting exemptions from securities rules and instead focus on market liquidity and investor protection. "In short, while we wholeheartedly support technological innovation aimed at addressing market inefficiencies, attempting to issue 'securities-like' products through regulatory arbitrage is far from being innovative." TD Cowen analyst Jaret Seiberg also pointed out in a research report on Monday that there remains uncertainty in tokenized trading mechanisms, with some of the challenges revolving around optimal price discovery. "The traditional stock trading system requires achieving the national best bid or offer, which is what gives rise to a multi-platform concurrent trading landscape. We believe that it will be difficult to maintain this mechanism after stock tokenization." Citadel advocates that the SEC should not grant exemptive relief and suggests advancing rulemaking through roundtable discussions. "The Commission must establish a deliberative and transparent process for assessment, including a public comment period and a comprehensive cost-benefit analysis," the company emphasized in the letter.