JP Morgan and Citadel have confronted the U.S. Securities and Exchange Commission (SEC) over its proposed regulatory exemptions for crypto firms. In a closed-door meeting, these financial giants, along with the Securities Industry and Financial Markets Association (SIFMA), expressed concerns that allowing crypto companies to issue tokenized securities without full registration could pose systemic risks to the U.S. economy. They highlighted a recent $19 billion liquidation event as evidence of potential market instability. The core of the debate centers on balancing innovation with investor protection. While tokenized securities promise increased efficiency, JP Morgan and Citadel argue that exempting them from standard securities laws could lead to significant economic risks. This confrontation is set against a backdrop of evolving SEC policies and ongoing congressional debates on digital asset legislation, which will shape the future of crypto regulation and its integration with traditional finance.