SEC faces rising divide over regulation of tokenised securities amid industry tensions

The Securities and Exchange Commission’s Investor Advisory Committee heard sharply divergent views on the regulation of tokenised securities at a virtual meeting on December 4, 2025, underscoring a growing rift between traditional finance incumbents and crypto-native firms over how real‑world asset tokenisation should be governed.

According to the original report, the panel brought together senior figures from Wall Street and the crypto industry , including representatives from BlackRock, Coinbase and Citadel Securities , to discuss how issuance, trading and settlement of tokenised equities might fit within the Commission’s rulebook. The committee’s findings will be used to inform the SEC’s path forward on tokenisation. SEC materials show the meeting comprised two panels, one on corporate governance and a second specifically on tokenisation. citeturn2search0turn3search0

SEC Chair Paul S. Atkins framed the issue as a fundamental test of whether long‑standing regulatory models built around intermediaries can be adapted for distributed‑ledger technology. “As we modernize our rules, we must consider the full scope of these changes, both in how markets trade and in how security ownership is recorded and serviced. I welcome the IAC’s assistance in helping us think through how to respond appropriately to these innovations,” he said during the meeting. Atkins also warned that tokenised shares risk becoming “nothing more than conversation pieces if their owners cannot trade them competitively in liquid on‑chain environments,” while urging the Commission to “think carefully about how our regulatory mandate intersects with technological realities.” citeturn1search0turn2search0

Voices from the panel reflected competing commercial and philosophical priorities. Samara Cohen, BlackRock’s Senior Managing Director and Global Head of Market Development, described the session as “useful” and said the discussion revealed a wide range of “distinct paths and perspectives,” adding that the diversity of view suggests “there’s probably more than one solution.” BlackRock and other TradFi participants emphasised the importance of preserving investor protections and market integrity as tokenisation scales. citeturn1search0

By contrast, crypto firms and industry groups warned against regulatory approaches they say would treat software protocols as if they were traditional intermediaries. The controversy intensified after Citadel Securities sent a December 2, 2025 submission to the SEC arguing that decentralised finance (DeFi) platforms facilitating trades in tokenised U.S. equities largely meet statutory definitions of “exchange” or “broker‑dealer” and therefore should not receive broad exemptive relief. Citadel warned that differing regimes for the same underlying security would undermine the Exchange Act’s technology‑neutral aims and urged a cautious, rulemaking‑based approach to tokenisation. citeturn4search0turn5search0

The Citadel letter provoked immediate backlash from parts of the crypto community. Hayden Adams, founder of the Uniswap protocol, publicly accused Citadel’s CEO of “coming for DeFi” by seeking to treat open‑source software developers like centralised market intermediaries. The Blockchain Association’s CEO, Summer Mersinger, described Citadel’s approach as “overbroad and unworkable,” arguing that regulating software builders as custodians would “undermine U.S. competitiveness, drive innovation offshore, and do nothing to advance investor protection.” Industry commentators warned that heavy‑handed rules could push developers and activity overseas while failing to address the actual sources of custody‑and‑counterparty risk. citeturn1search0turn6search0

The debate at the IAC reflected several recurring regulatory fault lines:

• Scope and classification: whether tokenised shares should be treated identically to traditional equities under existing law, or whether bespoke rules and limited exemptions are needed to accommodate new market structures. citeturn3search0turn4search0
• Intermediary responsibility: how to allocate regulatory obligations when trading occurs on‑chain via permissionless protocols with open‑source contributors rather than identifiable market participants. citeturn1search0turn4search0
• Market structure and liquidity: concerns that tokenised markets could either deepen liquidity by enabling new participants and trading venues, or fragment liquidity and siphon order flow away from regulated venues. citeturn5search0

Regulators face practical questions about applying long‑standing rules , including Regulation NMS, short‑selling restrictions and settlement requirements , to code‑based trading environments. SEC agenda materials show the committee explicitly considered how market‑structure rules would operate for tokenised equities, and whether the Commission’s investor‑protection mandate can be met without stifling innovation. citeturn3search0

For now, the exchange of views at the IAC highlights the policy trade‑offs the SEC must weigh: protecting investors and orderly markets while enabling technological change that could lower costs and broaden access. Industry participants told the panel that a one‑size‑fits‑all answer is unlikely; regulators will need targeted, technically informed guidance and, where appropriate, formal rulemaking to reconcile competing objectives. citeturn1search0turn5search0

As tokenisation pilots and products proliferate among asset managers and trading firms, the policy choices the SEC and market participants make in the coming months will largely determine whether the United States shapes the future of tokenised securities , or cedes leadership to jurisdictions that adopt different balances between innovation and regulation.