US financial giant Citadel calls for cautious response from SEC regarding security tokenization.

## A cautious view on tokenization stemming from a sense of crisis

According to reports from Bloomberg and The Block, one of the world's largest market makers, Citadel Securities, has submitted a statement to the U.S. Securities and Exchange Commission (SEC) requesting a cautious approach to the tokenization of securities. This letter was sent to the SEC's cryptocurrency task force on Monday.

Citadel Securities argued in its opinion that regulatory exemptions should be avoided in the tokenization of securities and that progress should be made through a formal rule-making process. It emphasized that "the misuse of regulatory rulings against similar securities is not innovation" and expressed support for technological innovations aimed at improving market efficiency.

The company expressed concerns that the tokenization of securities could siphon liquidity from traditional equity markets and create new liquidity pools inaccessible to institutional investors such as pension funds and banks. They also pointed out the risks of investor confusion and the creation of an unfair competitive environment between exchanges and listed companies.

Securities tokenization is a technology that digitally represents traditional securities on the blockchain, enabling 24-hour trading and instant settlement. Cryptocurrency exchanges such as Coinbase, Kraken, and Robinhood have already begun to engage in this, and direct competition with traditional securities firms is expected.

SEC Chairman Paul Atkins revealed last week that he is considering an "innovation exemption" and expressed the view that "everything that can be tokenized will eventually be tokenized." He disclosed that they are looking into limited regulatory relief measures to promote the construction of an ecosystem for tokenized securities at a press event following the passage of the Genius Act for stablecoins.

However, Citadel Securities opposed the granting of exemptions and instead requested a roundtable discussion and the establishment of formal rules. "The committee needs to pursue a careful and transparent process, and providing opportunities for public comment and appropriate cost-benefit assessment is essential," it emphasized.