As the SEC pushes forward with plans to modernize securities markets through tokenization, Citadel Securities is urging caution—arguing that digital transformation must deliver real-world efficiency, not just regulatory shortcuts.
In comments submitted to the SEC’s Crypto Task Force, Citadel emphasized that tokenized assets will only succeed if they meaningfully enhance market operations, rather than offering temporary gains through regulatory arbitrage. While tokenization is often praised for slashing settlement times and reducing costs, Citadel warned it could also fracture market liquidity and restrict access for large institutional players like pension funds and endowments.
Despite those concerns, momentum around tokenization is growing fast. Asset managers like BlackRock and Franklin Templeton have entered the space, joining crypto-native firms such as Coinbase and Kraken. The market for tokenized real-world assets has already topped $25 billion, according to RWA.xyz.
SEC Chair Paul Atkins remains optimistic, comparing tokenization to the leap from CDs to streaming and even suggesting regulatory carve-outs to spur innovation.
Yet challenges remain for traditional finance. JPMorgan’s recent exploration of Bitcoin-backed loans underscores a broader shift, but experts like Ledn CEO Adam Reeds caution that legacy institutions face serious hurdles—particularly around secure custody, asset volatility, and managing liquidations.
Other voices in the space, like Circuit CEO Harry Donnelly, highlight another persistent issue: permanent asset loss. His company is developing recovery solutions to help bridge the gap between crypto tech and institutional expectations.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/wall-street-giants-clash-over-future-of-asset-tokenization/