Financial services giant Citadel Securities has advised US regulators to adopt a measured approach towards regulating tokenized securities, stressing the need to balance innovation with market stability.
The firm previously communicated concerns to the Securities and Exchange Commission (SEC) in October 2023, advocating for a deliberate pace in establishing oversight frameworks for tokenized assets. Citadel cautioned against overly rapid regulation, warning it could potentially lead to unforeseen negative consequences.
Citadel underscored the importance of learning from past financial innovations. The advisory specifically referenced the evolution of Alternative Trading Systems (ATS), which ultimately enhanced market efficiency following cautious and incremental regulatory adoption. This historical context provides a blueprint for approaching tokenization.
The firm’s position highlights risks to investor confidence if regulation proceeds too hastily. Citadel’s stance calls for regulatory frameworks that prioritize market transparency and robust oversight, ensuring stable development of the tokenized securities sector.