A recent HSBC report highlights the escalating debate in the U.S. over the regulation of tokenized stocks, with traditional financial institutions and the crypto industry at odds over whether DeFi trading infrastructure should be regulated like traditional exchanges. Citadel Securities has submitted a 13-page document to the SEC, advocating for most DeFi protocols to be regulated as exchanges to prevent regulatory arbitrage and the emergence of weaker "shadow markets." In contrast, the crypto industry, represented by Coinbase's VP of Global Regulatory Policy Scott Bauguess, calls for rules that better align with decentralized models. While the SEC's final stance remains unclear, HSBC suggests that a regulatory sandbox could be a viable solution, as the SEC is unlikely to allow on-chain stock markets for U.S. users to operate under significantly lighter regulations than traditional exchanges.