Wall Street and SEC clash over crypto regulation

Wall Street warns the SEC that exempting tokenized securities and DeFi could destabilize markets. The SEC insists existing laws apply. Debate continues over crypto and stablecoin rules.

Wall Street giants like JPMorgan, Citadel, and SIFMA recently met with the SEC's crypto task force to voice concerns about the agency’s regulatory stance on tokenized securities and decentralized finance (DeFi). They cautioned that granting broad exemptions from securities laws could destabilize markets and weaken investor protections, citing the recent $19 billion crypto flash crash as a warning. In response, the SEC issued guidance reaffirming that tokenized securities are still subject to federal securities laws, regardless of their blockchain format. Meanwhile, the Senate remains gridlocked over crypto market structure legislation, especially regarding stablecoin yield provisions. The Trump administration plans to meet with banking and crypto executives to address the stalled CLARITY Act, focusing on how it treats interest and rewards on dollar-pegged stablecoins. Industry leaders argue that regulation should be based on economic activity, not technology or labels, and that core principles must apply equally to all financial instruments.