HSBC's latest report states that the debate over US regulation of "tokenized US stocks" is rapidly escalating, with traditional financial institutions and the crypto industry taking opposing positions on whether DeFi trading infrastructure should be regarded as traditional exchanges. The report notes that Citadel Securities submitted a 13-page document to the SEC, arguing that most DeFi protocols should be regulated as exchanges; otherwise, this could lead to regulatory arbitrage and weaker "shadow markets." On the other hand, representatives of the crypto industry, such as Coinbase's Global Head of Policy Scott Bauguess, are calling for rules better aligned with decentralized models. HSBC said that the SEC's ultimate stance remains unclear, but it is unlikely to allow on-chain stock markets serving US users to operate under significantly lighter regulatory standards than traditional exchanges, and that regulatory sandboxes may be a feasible solution. (CoinDesk)