Wall Street pushes back as SEC eyes crypto exemptions amid bill stall

Top Wall Street firms met with the SEC this week to voice concerns over the regulator’s aggressive new approach to digital assets, highlighting growing tensions between traditional finance and the crypto sector.

Summary

• JPMorgan, Citadel, and SIFMA representatives sat down with the SEC’s crypto task force.
• The firms warned that regulatory relief based on technology labels rather than economic function could “undermine investor protection.
• The meeting comes as SEC Chair Paul Atkins prepares to issue sweeping innovation exemptions for the crypto industry.

JPMorgan, Citadel, and SIFMA representatives sat down with the SEC’s crypto task force on Tuesday to discuss the potential fallout from the agency’s plan to grant broad exemptions for tokenized securities and certain decentralized finance (DeFi) projects.

According to SIFMA-prepared materials, the industry warned that regulatory relief based on technology labels rather than economic function could “undermine investor protection and lead to market disruptions.” Officials cited last October’s crypto flash crash, which wiped out $19 billion in a single day, as evidence of the risks posed by unregulated tokenized trading. The group urged the SEC to ensure that any exemptions do not inadvertently destabilize the broader U.S. economy.

The meeting comes as SEC Chair Paul Atkins prepares to issue sweeping innovation exemptions for the crypto industry, offering legal assurances that could shield companies from triggering securities laws violations while experimenting with tokenized assets or DeFi. Meanwhile, legislative efforts to codify crypto protections in federal law have stalled in the Senate. A crypto market structure bill, designed to clarify the legal framework for digital assets, has been delayed by disputes among industry stakeholders—including DeFi advocates, SIFMA, and even tensions between Coinbase and the banking lobby over stablecoin rewards.

The impasse highlights the delicate balancing act facing regulators and lawmakers: how to foster innovation in digital finance without jeopardizing investor safety or market stability. As Wall Street and crypto players continue to clash over exemptions and oversight, the path forward for U.S. crypto regulation remains uncertain, leaving the industry in a state of cautious anticipation.