Oct. 16, 2026
Vanessa A. Countryman, Secretary U.S. Securities and Exchange Commission 100 F Street NE Washington, DC 20549-1090 RE: File No. S7-04-26 – Exemption to Facilitate Trading of Tokenized NMS Stock Dear Secretary Countryman, I am writing to express my strong opposition to the proposed conditional exemptive relief allowing the trading of tokenized NMS stocks via automated market makers and blockchain-based infrastructure. While framed as financial innovation, this framework introduces systemic risks that threaten to devolve our regulated equity markets into an uncontrollable "wild-west" environment. The Commission’s foundational mandate is to maintain fair, orderly, and efficient markets while protecting retail investors. This proposal actively undermines that mandate in the following ways: De-centralization Hinders Effective Oversight: Traditional equity markets rely on clear, centralized lines of sight via clearinghouses and registered broker-dealers to monitor beneficial ownership and stop wash trading. Attempting to police these predatory behaviors across distributed ledger infrastructure is an operational paradox. Pseudonymous wallet dynamics will inevitably facilitate volume manipulation and spoofing that existing surveillance systems are unequipped to catch in real-time. Oracle and Latency Arbitrage Risks: The reliance on external data oracles to bridge off-chain stock pricing onto the blockchain introduces a systemic vulnerability. Any delay, glitch, or manipulation of these price feeds opens the door for sophisticated actors to front-run retail investors, turning tokenized equities into a playground for predatory arbitrage. Fragmented Liquidity and Flash Crashes: Promoting 24/7 trading for fractionalized tokens will structurally segment market liquidity. During off-market hours, low-volume trading blocks will experience massive bid-ask spreads and heightened volatility, increasing the probability of flash crashes that harm everyday investors who believe they are participating in a stable environment. A "regulated tokenized environment" is an oxymoron. If the platform is truly decentralized and permissionless, it cannot be policed against human greed and manipulation. If it is entirely centralized and restricted, it is merely a slower, less secure version of our current system that adds unnecessary layers of structural risk. I urge the Commission to deny this exemption and protect the integrity of our capital markets from unproven, high-risk cryptographic experiments. Sincerely, Peter Cohen River Edge, New Jersey