Five Wall Street firms met with the U.S. Securities and Exchange Commission’s cryptocurrency working group on Tuesday to discuss a regulatory approach to digital assets and decentralized finance (DeFi), as well as how tokenized securities should be treated under existing federal law.
According to an SEC memo released on 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 cryptocurrency working group.
During the meeting, participants argued that securities should not be allowed to trade under different rules just because they are issued or traded on a blockchain rail, and warned that regulatory shortcuts could allow tokenized stocks or other securities to bypass long-standing investor protection and market structure requirements. They also urged the SEC to rely on formal rulemaking rather than broad exemption relief.
Wall Street firms said they agreed that innovation in digital markets should advance within the context of investor protection and market integrity. They opposed a broad, immediate exemption for tokenized trading activities, arguing that tokenization changes the market pipeline rather than the underlying economic reality of the securities. Tokenized instruments, whether issued natively or through a rights or “wrap” structure, are considered the economic equivalent of traditional securities.
The meeting came nearly a month after Citadel released a 13-page letter suggesting that the SEC’s DeFi protocols dealing with tokenized securities require stricter supervision. The cryptocurrency industry responded immediately, calling the arguments “baseless.”
Citadel’s letter comes amid a broader debate over how the SEC should regulate DeFi and tokenized securities, quickly drawing criticism from some in the crypto industry.
DeFi was not a central topic during the conference and was mentioned only when it raised regulatory issues for the trading of tokenized securities, specifically around how exchange, broker-dealer and market access rules apply to decentralized or hybrid models. There was no discussion of broader DeFi activities such as lending or governance.
Speaking at a SIFMA roundtable on 24/7 trading on Wednesday, SEC Director of Trading and Markets Jamie Selway said that “some non-equity markets, such as digital asset markets, currently operate on a 24/7 basis,” adding that “there is a growing consensus among market participants that they expect equity markets to follow this path.”
Selway said extending trading hours could make the U.S. market more competitive if implemented through shared infrastructure, common protocols and careful attention to operational risks such as corporate conduct.
Overall, the SEC meeting reflected a growing convergence among regulators and major financial institutions around a common premise: Tokenization may modernize markets but does not require a separate regulatory regime.
