TL;DR
- JPMorgan, Citadel, and SIFMA met with the SEC to voice their opposition to crypto exemptions.
- Institutions warn that allowing tokenized securities to trade outside current laws could damage the economy.
- The conflict arises as the market structure bill remains stalled in the U.S. Senate.
A new rift is fracturing the U.S. regulatory landscape after Wall Street launched a wave of criticism against DeFi during a private meeting with the SEC. Representatives from JPMorgan, Citadel, and the influential SIFMA group expressed deep concern over the permissive approach the agency reportedly plans to adopt.
Records from the meeting reveal that financial leaders fear exemptions for tokenized securities will undermine investor protection. Consequently, they argue that regulatory treatment must focus on economic characteristics rather than the underlying technology used by the protocols.
SIFMA cited October’s crypto “flash crash” as an example to illustrate the dangers of operating outside existing securities laws. In doing so, the traditional sector aims to halt the legal safeguards that SEC Chairman Paul Atkins intends to grant later this month.
The Clash Between Traditional Finance and Decentralized Innovation
Wall Street’s pushback against DeFi comes just as federal crypto market structure legislation has stalled in the Senate. Ongoing disputes between “banking wolves” and platforms like Coinbase have halted progress on a comprehensive federal framework.
Furthermore, decentralization advocates were not invited to the closed-door meeting, further heightening tensions between the two sectors. Despite the pressure, Atkins is maintaining his plan to issue waivers to encourage experimentation in areas like tokenized securities without the threat of enforcement actions.
In summary, the battle for control over the digital financial ecosystem is intensifying. Wall Street demands a “level playing field” with equal rules for all, while the crypto industry seeks the legal breathing room necessary to evolve beyond the constraints of decades-old securities laws.
