Wall Street Banks Urge SEC to Apply Traditional Rules to Blockchain-Based Securities

Representatives from several large banks, broker‑dealers and prominent law firms met with Securities and Exchange Commission officials to press a single substantive point: tokenization alters settlement and transfer plumbing but does not change the economic rights that define securities. Attendees argued tokenized instruments should be subject to the same investor‑protection, marketplace and intermediary rules that govern conventional securities, and they urged the SEC to pursue transparent rulemaking rather than rely on piecemeal exemptive relief. The discussion treated decentralized finance only in narrow, operational terms—how certain DeFi trading mechanics intersect with broker, exchange and access rules—rather than as a separate policy domain that would justify a divergent legal regime. Industry speakers said harmonized requirements would limit regulatory arbitrage, reduce systemic risk, and create a predictable compliance baseline for traditional dealers and market‑makers entering tokenized markets. The meeting occurred against the backdrop of active policy work elsewhere: recent public filings and legal commentaries have proposed graded, checklist‑style classifications for ambiguous tokens and suggested mechanisms to reconcile SEC and CFTC jurisdiction. Participants referenced those parallel debates while stressing that any new categories should not be used to carve out wholesale exemptions from market‑structure or custody obligations. Lawmakers' stalled markup of a broad crypto bill and intercommittee disputes over developer exemptions were also part of the context, prompting industry actors to press the SEC for clearer administrative rules in lieu of uncertain statutory outcomes. Several attendees noted international developments—such as Europe’s MiCA framework—are shaping firms’ strategic choices and heightening pressure for timely U.S. clarity. SEC officials in the session signaled interest in operational changes like extended trading windows for certain instruments but emphasized that longer hours would require commensurate surveillance, clearing and access standards. The practical near‑term effect of the meeting is likely to be a regulatory trajectory that favors formal proposals, interpretation letters and targeted rulemaking over broad blanket relief for tokenized offerings and trading venues. For crypto‑native projects, the message from Wall Street incumbents and their advisers was stark: expect integration into existing legal scaffolding rather than a bespoke, laxer regime. That dynamic will shape how token issuers, custodians, and on‑chain trading platforms design governance, documentation, and compliance architectures going forward.