Market Maker Calls for Substance in Tokenized Securities

Citadel Securities has cautioned the U.S. Securities and Exchange Commission (SEC) that streamlined rules for tokenizing securities must drive actual market improvements rather than create regulatory loopholes. The financial giant emphasized that 【tokenization】 should focus on delivering tangible benefits to investors through technological advancement, not exploiting gaps in oversight.

The Promise and Pitfalls of Blockchain-Based Assets

While blockchain technology offers potential cost reductions and efficiency gains by cutting intermediaries, Citadel warned that improper implementation could fragment liquidity. The firm noted particular concern about creating parallel markets inaccessible to pensions, endowments and other institutional players ——a development that might destabilize traditional equity markets——.

Institutional Adoption Faces Technical Hurdles

As major firms like BlackRock and Franklin Templeton enter the 【$25 billion】 tokenized assets space, practical challenges emerge. Ledn CEO Adam Reeds highlighted custody security, collateral volatility and liquidation protocols as critical barriers. "When markets move rapidly, institutions need absolute clarity about asset management," he told industry observers this week.

Regulatory Balancing Act

SEC Chair Paul Atkins has compared tokenization's potential to audio format revolutions, proposing innovation-focused exemptions. However, Citadel's intervention suggests Wall Street remains divided on how quickly to embrace blockchain-based securities without proven infrastructure.

The Custody Conundrum

Circuit CEO Harry Donnelly's recent development of a crypto recovery engine underscores another adoption barrier. "Permanent asset loss remains a systemic risk," he noted, with industry data showing 【17%】 of institutional investors cite custody concerns as their primary hesitation.

Path Forward Requires Collaboration

The debate highlights growing pains as traditional finance integrates blockchain solutions. With tokenized assets projected to reach 【$10 trillion】 by 2030, regulators face pressure to foster innovation while maintaining market stability ——a challenge requiring unprecedented public-private coordination.