Citadel Securities sent a letter to the SEC urging caution in the swift introduction of tokenized stocks to the market. The firm warns of risks and potential impacts on the industry.
Citadel's Warning
In a letter sent Monday to the SEC’s Crypto Task Force, Citadel Securities warned against rushing to introduce tokenized stocks, arguing that it could create confusion for investors and unfairly advantage certain exchanges and private companies.
Risks of Tokenized Securities
A tokenized security is essentially a crypto-based version of a stock. It represents the asset but doesn’t provide direct ownership. Citadel asserts that without proper rules, allowing these products to roll out could harm the already fragile IPO market. The firm also expresses concerns that giving private companies another avenue to raise money might pull more deals out of the public sphere.
SEC's Position and New Initiatives
The SEC, in response, declined to offer any new insights, simply stating that the chairman's stance had already been made public. SEC Chairman Paul Atkins mentioned that the commission is exploring an 'innovation exception' to allow firms to experiment with tokenized trading while bypassing certain restrictions. These comments came after the passage of a major stablecoin bill setting clear rules for companies issuing crypto tied to the dollar.
Citadel Securities urges the SEC to proceed cautiously and follow a structured rulemaking process to ensure the safe introduction of tokenized stocks. This highlights the importance of transparent and well-considered regulatory approaches.
