Citadel Securities wrote a compelling letter to the @SECGov on the topic of tokenized public stocks, with which I strongly agree:

"Simply put, while we strongly support technological innovations designed to address market inefficiencies, seeking to exploit regulatory arbitrage…

— Carlos Domingo (@carlosdomingo) July 22, 2025

Extracts from the letter:

“Citadel Securities appreciates the opportunity to provide input to the Securities and Exchange Commission’s (the “Commission”) Crypto Task Force. The digital asset product landscape is diverse and evolving, and a key focus of the Crypto Task Force is to provide greater clarity to market participants regarding which digital assets are considered “securities” under federal law.

However, certain digital assets—such as tokenized U.S. equities—clearly fall within the definition of a “security,” and the Commission should resist self-serving requests for broad exemptions from longstanding securities regulations for these products. Simply put, while we strongly support technological innovations designed to address market inefficiencies, seeking to exploit regulatory arbitrage for “look-a-like” securities is not innovation.

While targeted refinements may be required to a limited set of Commission rules and regulations to accommodate specific immutable characteristics of a tokenized U.S. equity, the overarching objective should be to treat tokenized U.S. equities in the same manner as traditional equity securities from a regulatory perspective—particularly when it comes to bedrock principles such as best execution, fair access, and pre- and post-trade transparency. And to the extent the Commission determines that the current regulatory framework for U.S. equities can be improved, those improvements should be applied market-wide. It is critical that the Crypto Task Force and the Commission proceed in a deliberative and transparent manner as it tackles these issues, with a focus on investor protection, capital formation, and market liquidity and efficiency.

Tokenized securities must achieve success by delivering real innovation and efficiency to market participants, rather than through self-serving regulatory arbitrage. The Commission should not allow token purveyors to profit simply by avoiding the Commission’s time-tested framework for protecting the interests of retail and institutional investors.

It is untenable to grant “look-alike” products marketed as an alternative to listed equity securities broad exemptive relief from longstanding regulations that are core to the SEC’s mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.

We agree that our regulatory regime can benefit from further enhancements, however, these should be pursued through the standard and transparent rulemaking process. We also encourage the Commission to partner with the CFTC and foreign regulators to ensure global coordination and safeguard U.S. equity markets from other novel products referencing U.S. underliers that risk investor confusion and unintended consequences for U.S. market functioning.”

Source: Citadel Securities