The Blockchain Association rebutted Citadel Securities’ arguments against tokenized U.S. equity securities and decentralized finance trading protocols in a submission to the Securities and Exchange Commission (SEC).
Tokenization is the process of representing traditional financial assets on blockchain networks so ownership, transfer, and related market functions can operate on more modern rails. Just as the transition to electronic trading in the 1990s made financial markets faster and more efficient, tokenization represents the next phase in the modernization of capital market infrastructure.
Also, according to the association, tokenization can support faster settlement, stronger transparency, more resilient market infrastructure, and more efficient movement of assets and collateral across the financial system. Further, it advances policy goals of expanding access to investment opportunities for investors and keeping U.S. capital markets competitive.
Citadel is asking the SEC to regulate the blockchain rails behind tokenized markets as if those rails were the same as traditional financial intermediaries. The Blockchain Association believes that is the wrong legal framework and the wrong policy choice.
The Blockchain Association’s filing says securities laws regulate intermediaries; they do not automatically turn neutral infrastructure into an exchange, broker, or dealer simply because that infrastructure is part of a tokenized market. Validators, autonomous smart contracts, non-custodial software, and other blockchain-based tools do not become regulated middlemen just because they help power upgraded financial rails.
“Tokenization is about bringing better technology to the most important capital markets in the world,” Summer Mersinger, CEO of Blockchain Association, said. “This filing reflects Blockchain Association’s broader commitment to advancing tokenization policy in Washington and ushering in a market evolution that can make U.S. finance more efficient, more resilient, and more globally competitive.”
The digital asset industry is not asking for a free pass. Tokenized securities are still securities. The question is whether the SEC will apply the law in a way that reflects how modern infrastructure actually works. The filing also explains that the SEC already has tools it can use to support responsible progress, including exemptive relief and other pathways the Commission has historically used when new market structure technologies emerge.
The association concludes that policymakers and regulators face a clear choice: shape the next generation of market infrastructure in the U.S., or watch it develop elsewhere.