Representatives from major Wall Street firms met with the U.S. Securities and Exchange Commission’s (SEC) Crypto Task Force to raise questions and concerns about DeFi. They also discussed the rise of tokenized securities and the risks this poses to traditional businesses.
Representatives from JPMorgan Chase, Citadel, and the SIFMA group attended the meeting on January 28th to discuss concerns regarding recent comments made by SEC Chairman Paul Atkins, who had spoken days earlier about potentially broad exemptions for innovation.
SIFMA and other attendees distributed informational documents outlining their central message: regulatory treatment should be based on economic characteristics, not the underlying code.
One of the main issues discussed was that some DeFi protocols perform economic functions similar to those of traditional intermediaries, and therefore, they called for similar treatment to ensure fair competition and a level playing field.
The firms highlighted intermediary-like functions in wallet providers, routing layers, liquidity providers, and validators, noting that these participants can replicate the market risks of centralized platforms.
The concerns of major Wall Street firms in the crypto landscape
According to some reports, Wall Street firms have three main concerns regarding the regulation of crypto assets and companies: tokenization models, operational frictions, and structural vulnerabilities.
For tokenization models, the concern centers on the possibility of tokenizing underlying securities without the issuer’s consent, potentially creating parallel trading regimes and a loss of visibility for the issuer.
At the operational level, DeFi structures may struggle to match the performance of the US stock market, pointing to variable transaction times, congestion, and settlement delays as potential sources of systemic friction.
Finally, the presentation highlighted manipulative tactics such as “address poisoning” scams and cited extremely high leverage levels in some DeFi perpetual futures.
The speakers also raised legislative concerns related to proposals such as the CLARITY Act, warning that poorly tailored statutory changes could either overextend regulatory powers or create regulatory arbitrage that harms regulated entities.
The firms urged the SEC to apply a principle of functional equivalence: treating market activities based on their economic impact and applying existing investor protection standards instead of creating broad, technology-based exemptions. Agency records indicate that the meeting sought a thorough, data-driven analysis as the basis for any tailored regulations.
