A new regulatory clash between the Blockchain Association and the SEC could shape whether Wall Street incumbents retain their grip on stock trading as equities migrate to blockchain infrastructure. The dispute, formalized in an SEC filing published on April 6, 2026, centers on whether decentralized protocol operators should be regulated like traditional brokers and exchanges.
Why This SEC Crypto Fight Matters for Blockchain-Based Stocks
This is not a fight over whether tokenized stocks count as securities. Both sides agree they do. The real question is whether the on-chain infrastructure used to trade those securities, including validators, front-end interfaces, and liquidity providers, must register as regulated financial intermediaries.
On April 6, 2026, the SEC published Blockchain Association’s written submission arguing that non-custodial participants in DeFi protocols do not meet the statutory definitions of an exchange, broker, or dealer. The filing was directed at the SEC’s crypto task force, which is evaluating how tokenized securities should be governed.
The submission also argues that the SEC already has the legal tools to accommodate tokenized equity trading. Specifically, Blockchain Association claims the Commission can use Section 36 of the Securities Exchange Act to provide targeted exemptive relief, letting blockchain-based stock trading develop without forcing every protocol participant into a traditional licensing framework.
On the other side, Citadel Securities laid out the incumbent position in a December 2, 2025 letter. The Wall Street market maker argued that tokenized securities should not receive broad exemptions from exchange and broker-dealer rules, asked the SEC to identify intermediaries involved in tokenized-equity trading, and urged a formal notice-and-comment rulemaking process. In short, Citadel wants tokenized markets to operate under the same oversight structure that governs traditional exchanges.
The dispute matters well beyond crypto tokens. If the SEC sides with Citadel’s framework, blockchain-based stock platforms would need to mirror the compliance architecture of existing exchanges. That could preserve the role of established intermediaries even as the underlying settlement technology changes, similar to how crypto apps are already losing ground as institutional products absorb market share.
Could Wall Street Keep Control as Equities Move On-Chain?
“Control” in this context means custody, order routing, settlement, and compliance gatekeeping. Traditional stock markets rely on a chain of registered intermediaries: exchanges, clearinghouses, broker-dealers, and transfer agents. Each takes a cut and adds a layer of oversight.
Blockchain rails could compress that chain. A tokenized equity trade settled on Ethereum, for example, could theoretically execute peer-to-peer through a smart contract, with settlement finality in minutes rather than the T+1 standard. The question is whether regulators will allow that compression or require intermediaries at every step.
Blockchain Association CEO Summer Mersinger framed the stakes directly in a public statement accompanying the filing:
“Tokenization is about bringing better technology to the most important capital markets in the world.”
— Summer Mersinger, CEO of Blockchain Association
Mersinger’s argument is that neutral blockchain infrastructure, code that processes transactions without taking custody of assets, should not automatically be classified as a regulated financial intermediary. The association’s filing specifically names validators, front-end interfaces, and liquidity providers as participants that operate without the custodial control that triggers broker or exchange registration.
Citadel’s position does not reject tokenization outright. The firm accepts that equities will move on-chain. But its December 2025 letter insists the transition should happen within existing regulatory guardrails, with intermediaries identified and registered at each step. That approach would keep firms like Citadel, which operates as one of the largest market makers on traditional exchanges, positioned at the center of tokenized trading.
Ethereum, the blockchain most frequently discussed in the context of tokenized securities, traded at $2,065 at press time with a market cap near $249 billion. The network’s existing DeFi ecosystem already demonstrates how on-chain trading can function without traditional intermediaries.
DeFi protocols on Ethereum already handle billions in daily volume through automated market makers and lending platforms, offering a working template for how tokenized equities could trade without centralized order books. The growing DeFi infrastructure on Ethereum underpins much of the technical argument for on-chain equity settlement.
What the Outcome Could Mean for Investors, Crypto Firms, and Markets
If the SEC adopts Citadel’s framework, tokenized stock trading would largely replicate the existing market structure on new technology. Registered broker-dealers would still intermediate trades, compliance costs would remain high, and retail access to on-chain equity products would flow through the same gatekeepers that control traditional markets.
If the SEC accepts Blockchain Association’s argument for targeted Section 36 relief, crypto firms building tokenized equity platforms could operate with lighter intermediary requirements. That could lower barriers for new entrants and expand direct market access, a shift with parallels to how emerging technologies challenge existing security assumptions across the financial system.
The practical impact on investors could be significant. Tokenized equities settled on blockchain could enable 24/7 trading, fractional share ownership without intermediary markup, and near-instant settlement. But those benefits depend on whether the regulatory framework allows the infrastructure to operate as designed, or requires it to mirror the intermediary-heavy architecture of existing exchanges.
The SEC’s crypto task force has not indicated a timeline for its conclusions. The filing sits alongside other submissions in an ongoing consultation process, and any formal rulemaking would require additional public comment periods. For now, the lines are drawn: Citadel wants tokenized markets built inside Wall Street’s existing structure, and Blockchain Association wants the law to let on-chain infrastructure compete on its own terms.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
