Five Wall Street firms met with the Securities and Exchange Commission’s Cryptocurrency Working Group 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, released Tuesday, representatives from the Securities Industry and Financial Markets Association (SIFMA), Cahill Gordon & Reindel LLP, Citadel LLC and JPMorgan Chase & Co. requested 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, warning that regulatory shortcuts could allow tokenized stocks or other securities to bypass long-standing market structure and investor protection requirements. They also urged the SEC to rely on formal rulemaking, rather than, for example, a broad exemption.
Wall Street firms said they agreed that innovation in digital markets should advance within the boundaries of investor protection and market integrity. They argued against a broad and immediate exemption for tokenized trading activities, saying that tokenization changes how the market works, not the underlying economic reality of securities. Tokenized instruments, whether issued natively or through entitlements or “wrapped” structures, were framed as economic equivalents of traditional securities.
The meeting took place almost a month after Citadel published a 13-page letter warning the SEC that DeFi protocols handling tokenized securities require stricter regulatory scrutiny. 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 only referenced to the extent that it raises regulatory issues for the trading of tokenized securities, particularly around how exchange, brokerage and market access rules could apply to decentralized or hybrid models. Broader DeFi activity such as lending or governance 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 24/7,” adding that a “growing consensus of market participants wants equity markets to follow this course.”
Selway said expanded business 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 SEC meeting reflected a growing convergence between regulators and major financial institutions around a shared premise: tokenization can modernize markets, but does not require a separate regulatory regime.
