US Wall Street Firms Meet the SEC to Discuss Crypto Regulations

Representatives of major Wall Street firms, JPMorgan and Citadel, met with officials of the US SEC on January 27. A memorandum from the SEC disclosed this, noting that the meeting was with the SEC Crypto Task Force.

Representatives of SIFMA were in attendance. The advocacy group joined the discussions. Cahill Gordon & Reindel LLP also participated.

Wall Street Firms and Advocacy Groups Lobby Against Different Rules for Tokenization

According to the memorandum, the meeting focused on the SEC’s regulation of digital assets. The Wall Street firms pushed back against the regulator’s permissive approach to the industry.

Of particular attention was how the SEC will regulate tokenized securities. While the regulator plans to provide an innovation exemption for some projects, the firm disagreed.

They warned that such could damage the US economy, and the same rules should apply to all securities. The innovation exemption could likely benefit DeFi projects and tokenized securities.

A comprehensive material prepared by SIFMA for the meeting and attached to the memorandum detailed these concerns.

The material titled “Regulating Tokenized Securities: Recommendations for the SEC Crypto Task Force” outlined the firms’ concerns. It also presented their proposed solutions. Together, it emphasized key regulatory issues in the crypto space.

They warned that exemptive reliefs for tokenized securities carry risks that could harm investors and disrupt markets. The $19 billion in liquidation due to the October 2025 flash crash was cited as a sign of what could happen.

SIFMA wrote:

Interestingly, the meeting follows several letters from SIFMA to the SEC Crypto Task Force regarding some of the SEC’s proposed rules. These include the innovation exemption for tokenized securities, regulation on wallet providers, and application of securities rules to DeFi.

CLARITY Act Set for Markup on Thursday After Stalling in Congress

The meeting between Wall Street firms and the SEC underscores growing resistance to crypto. It shows traditional financial institutions pushing back against the sector.

It highlights the tension between established finance and emerging digital assets. A similar pushback is happening in the Senate with the crypto market structure bill, aka the CLARITY Act.

Major US banks pushed back against stablecoin yield, among other issues. This has led to amendments that now threaten to derail the proposed legislation. A planned markup of the bill has already been delayed multiple times for various reasons.

However, it could be set for a markup vote by the Senate Agriculture Committee tomorrow. The markup would be keenly watched with several amendments up for debate, including one on ethics.

Still, the Senate Banking Committee has yet to have its markup vote, with stablecoin yield remaining a key issue. Many believe that there could be positive developments in the coming weeks.

While legislative efforts continue to stall, regulators are already making moves. CFTC chair Mike Selig announced a public discussion with SEC chair Paul Atkins.

They will address how both agencies plan to jointly regulate the crypto industry. The announcement signals a coordinated effort to shape future oversight.