Citadel Securities has urged the U.S. SEC to tighten oversight on DeFi platforms that offer tokenized U.S. stocks. What began as a routine regulatory comment quickly escalated into a heated debate between traditional finance giants and crypto innovators—and the conversation is louder than ever.
Citadel argues that DeFi platforms, smart-contract developers, and even wallet providers are effectively acting like “exchanges” or “broker-dealers” when tokenized stocks are traded on their platforms. In Citadel’s view, these entities should follow the same securities laws that govern traditional markets, without any exemptions.
Citadel warns that giving DeFi regulatory relief could create a split system where the same assets operate under two different rulebooks. They say this would undermine the principle of technology-neutral regulation in U.S. securities law.
The crypto community strongly disagrees. Industry voices have criticized Citadel’s push as an attempt to protect its dominance. The Blockchain Association warned that regulating software developers like financial intermediaries could push innovation overseas without improving investor safety.
Uniswap’s Hayden Adams also criticized Citadel and Ken Griffin, saying it’s ironic that Citadel claims DeFi cannot offer “fair access.” Adams points out that open-source, peer-to-peer technology lowers barriers to liquidity and challenges the dominance of traditional finance.
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Similarly, Artem Tolkachev said Citadel is trying to protect its monopoly by arguing that DeFi should be regulated like traditional exchanges. While some on-chain systems resemble intermediaries, Tolkachev noted that automated protocols are not the same as discretionary control.
He also emphasized that tokenization already works within regulated systems and that outdated rules cannot govern modern 24/7 programmable markets. He argued that regulation should adapt to new technology rather than force innovation into old frameworks.
While the crypto industry pushes back, traditional finance groups like SIFMA and the World Federation of Exchanges support Citadel’s stance. They argue that tokenized securities must follow the same investor protections that have long governed U.S. markets—especially in light of recent crypto market turbulence .
