Citadel Securities contended that Decentralized Finance (DeFi) venues furnishing tokenized American equities ought to be governed under established securities statutes and should not be afforded exemptive dispensation by the SEC.
The financial intermediary, Citadel Securities, has proffered counsel that the Securities and Exchange Commission ought to intensify oversight on decentralized finance pertaining to tokenized equities, an action which generated significant opposition from cryptocurrency participants.
The Securities firm, Citadel Securities, apprised the SEC in a correspondence issued on Tuesday that DeFi constructors, intelligent contract programmers, and individual custody repository providers should not be conferred “extensive exemptive latitude” for presenting transactions involving tokenized American stocks.
It asserted that Decentralized Finance (DeFi) dealing venues probably fall within the parameters of a “trading facility” or “intermediary dealer” and ought to be supervised under regulatory securities mandates if tokenized stocks are presented.
“Conferring extensive exemptive latitude to expedite the dealing of a tokenized equity through DeFi conventions would establish two divergent regulatory frameworks for the transacting of the identical security,” it contended. “This consequence would represent the precise antithesis of the ‘technology-agnostic’ methodology encompassed by the Exchange Act.”
The missive from Citadel, which was submitted in reaction to the SEC’s solicitation for commentary on the methodology that should be utilized for supervising tokenized equities, has incited significant repudiation from the cryptocurrency cohort and associations championing progress within the distributed ledger domain.
Crypto Users, Blockchain Association Push Back
“Who might have speculated that Citadel would dissent against advancements that excise avaricious, profit-extracting mediators from the fiscal structure?” the attorney and Blockchain Association governance member, Jake Chervinsky, queried on Thursday.
“Oh, right, literally every single person in crypto,”
he added.
Hayden Adams, the originator of Uniswap, further articulated that it “is logical that the sovereign of dubious conventional finance market manipulators disdains open-source, peer-to-peer mechanisms which possess the capacity to diminish the prerequisite for liquidity genesis.”
Summer Mersinger, the Chief Executive Officer of the cryptocurrency endorsement collective, the Blockchain Association, communicated that “the supervision of software constructors as if they constituted financial intermediaries would jeopardize US economic potency, shunt technological advancement abroad, and achieve nothing toward enhancing safeguarding for investors.”
“We urge the SEC to reject this overbroad and unworkable approach and instead focus regulatory attention on actual intermediaries who stand between users and their assets,”
she added.
Citadel dispatched correspondence to the SEC’s Digital Asset Task Force in July to assert that tokenized financial instruments “must obtain prosperity by furnishing genuine ingenuity and operational effectiveness to market stakeholders, rather than through self-interested regulatory manipulation.”
SIFMA Urges Against DeFi Carve-Out
The Securities Industry and Financial Markets Association (SIFMA), a commercial sector coalition, disseminated a parallel declaration on Wednesday, endorsing advancement but maintaining that tokenized securities must necessarily be subjected to the identical fundamental investor safeguards prevalent in conventional finance (TradFi).
It asserted that present-day aberrations within cryptocurrency venues, encompassing the October instantaneous market collapse, acted as “opportune recollections of why long-established securities oversight blueprints, fashioned to conserve market integrity and shield capital allocators, were initially conceived.”
The pronouncement mirrors the posture that the commercial sector coalition assumed in July, disavowing any SEC exemptive dispensation for distributed ledger and Decentralized Finance (DeFi) venues that facilitate the issuance of tokenized assets.
In November, the World Federation of Exchanges, a consortium representing prominent stock trading facilities, beseeched the SEC to relinquish its proposal to afford an “advancement dispensation” to cryptocurrency enterprises endeavoring to present tokenized equities.
