A major debate is unfolding in Washington as Wall Street giants and crypto industry leaders disagree on how the United States Securities and Exchange Commission (SEC) should regulate real-world assets (RWA) tokenization and the role decentralized finance (DeFi) should play in the process.
The tension surfaced at an SEC Investor Advisory Committee meeting on Thursday, where executives from Citadel Securities, Coinbase, Galaxy and others shared sharply different views.
For context, tokenization refers to placing real-world assets, such as equities, on the blockchain. As the SEC works to shape regulation around this growing trend, industry experts warn that the path forward is complex.
BlackRock Executive Highlights Divided Opinions
Samara Cohen, senior managing director and global head of market development at BlackRock, said the committee discussion showed just how broad the disagreements are.
In a report, she noted that the six-person panel reflected “distinct paths and perspectives,” adding that the range of views shows the challenge of the moment and suggests there is “probably more than one solution” for regulating tokenized assets.
The meeting followed rising tension sparked by a letter from Citadel Securities, submitted a day earlier. The firm urged the SEC to impose stricter rules on DeFi, particularly for companies offering tokenized securities. This recommendation triggered backlash across the crypto community.
Citadel Securities Pushes for Stricter Oversight
Citadel Securities argued that the SEC must identify all intermediaries involved in trading tokenized U.S. equities—even decentralized protocols—and avoid granting broad exemptions to DeFi platforms from “exchange” or “broker-dealer” classifications.
Jonah Platt, managing director and U.S. head of government and regulatory policy at Citadel Securities, clarified the firm’s stance on Thursday.
“Let me be clear, we believe the tokenization of U.S. equities represents another promise, and has the potential to further benefit investors,” Platt said, according to the report. However, he warned that giving DeFi blanket exemptions “could have negative implications for investors.”
He added, “We should identify the rules that don’t make sense, and we should change them. But the suggestion that we should just grant blanket exemptive relief… strikes us as very dangerous because the U.S. equity market is of such fundamental importance — we should take the time to get this right.”
Crypto Industry Leaders Call Citadel’s Proposal “Unworkable”
Some crypto executives said Citadel’s position ignores how DeFi operates. Scott Bauguess, vice president for global regulatory policy at Coinbase, agreed with a rule-by-rule approach but stressed that decentralized exchanges cannot follow the same obligations as brokers.
“You can’t put regulatory obligations on a DEX, the same that exists on a broker,” Bauguess said. He added that forcing those obligations onto a protocol would require it to take control of user assets and “introduce all the risks that don’t currently exist in that environment.”
U.S. SEC Chair Paul Atkins also addressed tokenization in his remarks. According to the report, he said the U.S. must create compliant pathways that enable innovation.
“If we want to boost innovation, investment, and jobs, we must provide compliant pathways that allow market participants to leverage this new technology,” Atkins said.
However, Commissioner Caroline Crenshaw, who is soon leaving the SEC, warned that tokenized stocks marketed as “wrapped securities” may carry hidden risks. She cautioned that “these tokenized products are far from a one-to-one replica of the underlying asset,” noting they could be less liquid and come with different ownership rights.
As the debate intensifies, it is clear that real-world asset tokenization is here, and the battle over how to regulate it has only just begun.
