Citadel Securities Challenges SEC on Tokenized Stock Exemptions

Citadel opposes SEC’s exemption plan for tokenized stocks to protect market liquidity.

Citadel Securities, a leading market maker, submitted a letter to the SEC opposing the provision of securities rule exemptions for tokenized stocks on July 23, 2025. Citadel warns these exemptions could disrupt traditional markets and confuse investors, receiving support from SEC Commissioner Hester Peirce.

Citadel Leads Industry Pushback Against SEC’s Token Plans

Citadel Securities, one of the largest market participants, addressed the SEC Crypto Working Group to oppose exemptions for tokenized stocks. Stephen Berger, Citadel’s Global Head of Government & Regulatory Policy, stated the firm’s stance against using regulatory loopholes, arguing that such moves do not constitute real innovation. Citadel secured the support of several industry peers, including SIFMA and Charles Schwab, who also advocated against piecemeal regulatory changes.

“While we strongly support technological innovations designed to address market inefficiencies, seeking to exploit regulatory arbitrage for ‘look-a-like’ securities is not innovation,” said Stephen Berger, source. The Citadel Securities Response to Crypto Task Force points to the potential diversion of capital from traditional public markets to private, blockchain-based ecosystems. Investors and institutions could face limitations due to compliance issues, potentially impacting IPO activity and liquidity. Crypto-native exchanges may experience trading volume spikes if exemptions are approved.

Hester Peirce, SEC Commissioner, publicly aligned with Citadel’s position, emphasizing the necessity for tokenized securities to comply with existing regulations. SEC Chairman Paul Atkins mentioned the agency’s ongoing evaluation of an innovation exemption mechanism, generating responses across the financial sector.

Market Data Highlights Stability in Traditional Crypto Assets

Did you know? Past regulatory efforts have favored startups or smaller pilots over major exchanges, creating a significant precedent for how exemptions are applied in financial markets.

Ethereum’s (ETH) market maintains stability. According to CoinMarketCap, the current price is $3,730.12, with a market cap of $450.27 billion. ETH’s 24-hour trading volume is $44.56 billion, showing a 0.76% increase. Over 90 days, prices grew by 109.12%.

Coincu research highlights potential fragmentation risks within traditional and digital markets. Tighter regulations could curb innovation but prevent fragmentation seen in unchecked blockchain asset proliferation. The outcome hinges on comprehensive analysis of prior financial protocols and regulatory shifts.