SEC Blockchain Dispute Pits Established Players Against Crypto Firms

A regulatory dispute is brewing between the Blockchain Association and the Securities and Exchange Commission (SEC) that has significant implications for the future of stock trading on blockchain infrastructure.

The clash centers around whether decentralized protocol operators should be regulated like traditional brokers and exchanges. The SEC's crypto task force is evaluating how tokenized securities should be governed, with submissions from both parties shedding light on the stakes.

According to the Blockchain Association, non-custodial participants in DeFi protocols do not meet the statutory definitions of an exchange, broker, or dealer. They argue that the SEC already has the legal tools to accommodate tokenized equity trading and can provide targeted exemptive relief without forcing every protocol participant into a traditional licensing framework.

Citadel Securities, on the other hand, advocates for a framework that would require intermediaries at every step, similar to existing exchanges. This approach would preserve the role of established players, but could stifle innovation in the space.