The post Regulatory fight over tokenized U.S. equities intensifies, HSBC says appeared on BitcoinEthereumNews.com.

HSBC revealed on Monday that mounting tension surrounding how the U.S. should regulate tokenized equities as major Wall Street firms and crypto industry leaders clash over competing visions for the future of on-chain markets. The bank noted that decentralized finance (DeFi) protocols have become the primary focus for regulatory scrutiny.  Tokenization involves issuing digital representations of real-world assets (RWAs) such as stocks, bonds, real estate, and private equity on a blockchain. According to HSBC, tokenization, which was once an experimental idea, has become a serious consideration for both TradFi and DeFi firms that aim to operate regulated on-chain trading venues.   Citadel Securities says many DeFi protocols meet exchange standards HSBC revealed on Monday that the recent meeting of the Securities and Exchange Commission’s (SEC) Investor Advisory Committee showed divisions on how a potential market for tokenized U.S. equities should be regulated. According to the bank, several TradFi representatives at the meeting argued that the commission should apply the existing exchange obligations to decentralized trading protocols. In contrast, some crypto executives called for frameworks that specifically target DeFi infrastructure.  Citadel Securities, a market-making giant, recently submitted a 13-page letter to the SEC, arguing that many DeFi trading protocols meet the statutory definition of an exchange and should therefore be regulated as such.  According to Citadel, granting broad exemptions to DeFi platforms may enable regulatory arbitrage and create a parallel market for tokenized stocks that lacks the investor protections present in TradFi. Scott Bauguess, Vice President for Global Regulatory Policy at Coinbase, told the committee that decentralized exchange models function differently from centralized exchanges and should not be treated as traditional exchanges. According to Bauguess, the new market structures require modernized rules that reflect decentralization, open-source infrastructure, and automated liquidity systems.  SEC Chair Paul Atkins reiterated that tokenization is part of the agency’s broader effort…

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Filed under: News - @ December 10, 2025 3:29 am