Response to Citadel Securities’ Comments on Tokenized Equity Markets

The document is a letter submitted to the U.S. Securities and Exchange Commission (SEC) in response to a letter from Citadel Securities regarding tokenized U.S. equities and distributed ledger technologies. The author, Aleksander Polzer, argues that Citadel's opposition to tokenized equity markets is driven by self-preservation and a desire to maintain its market dominance.

Polzer criticizes Citadel's claims that tokenized markets would lead to investor harm and capital formation disruptions, stating that blockchain-based systems can automate compliance, reduce counterparty risk, and enhance market transparency. He also argues that Citadel's framing of tokenized markets as a "shadow market" is misleading and ignores the benefits of fairer, rule-based access mechanisms.

Polzer highlights several points where Citadel's letter appears to conflate risk awareness with risk creation, and argues that the SEC should encourage innovation that enhances systemic robustness, reduces counterparty risk, and promotes immutable audit trails.

He also notes that Citadel's historical regulatory infractions, market share dominance, and resistance to technologies that reduce asymmetric informational advantages should be taken into account when evaluating their objections to tokenization.

Polzer concludes by urging the Crypto Task Force and the Commission to prioritize encouraging pilot programs under strict disclosure and audit standards, enabling interoperability with legacy systems, and ensuring that any exemptions granted to digital platforms are merit-based