Featured News Headlines
Citadel Calls for Tighter Oversight
Market maker Citadel Securities has urged the U.S. Securities and Exchange Commission to impose stricter regulations on decentralized finance platforms trading tokenized stocks — a move that has triggered strong criticism from the crypto community.
In a letter sent to the SEC on Tuesday, the firm argued that DeFi developers, smart-contract engineers, and self-custody wallet providers should not receive “broad exemptive relief” when enabling trading of tokenized U.S. equities. Citadel said DeFi protocols offering these assets likely meet the legal definitions of an “exchange” or “broker-dealer” and should therefore be regulated under existing securities laws.
“Granting broad exemptive relief to facilitate the trading of a tokenized share via DeFi protocols would create two separate regulatory regimes for the trading of the same security,” the company wrote. “This outcome would be the exact opposite of the ‘technology-neutral’ approach taken by the Exchange Act.”
The letter was submitted as part of the SEC’s ongoing request for public feedback on how tokenized stocks should be regulated.
Crypto Community Responds With Sharp Criticism
The response from crypto leaders and advocacy groups was swift. Jake Chervinsky, lawyer and board member of the Blockchain Association, remarked:
“Whoever thought Citadel would be against innovation that removes predatory, rent-seeking intermediaries from the financial system?”
He added, “Oh, right, literally every single person in crypto.”
Uniswap founder Hayden Adams also took aim at the market maker, saying it “makes sense the king of shady TradFi market makers doesn’t like open source, peer-to-peer tech that can lower the barrier to liquidity creation.”
Summer Mersinger, CEO of the Blockchain Association, said regulating software developers like financial intermediaries would harm the U.S. innovation landscape.
“Regulating software developers as if they were financial intermediaries would undermine U.S. competitiveness, drive innovation offshore, and do nothing to advance investor protection,” she said.
She urged the SEC to reject the proposal, adding that regulators should instead focus on “actual intermediaries who stand between users and their assets.”
Citadel previously wrote to the SEC’s Crypto Task Force in July, arguing that tokenized securities “must achieve success by delivering real innovation and efficiency to market participants, rather than through self-serving regulatory arbitrage.”
Industry Groups Echo Citadel’s Position
The Securities Industry and Financial Markets Association (SIFMA) issued a similar statement on Wednesday. While supporting technological innovation, the group insisted that tokenized securities must be subject to the same investor protections enforced in traditional finance.
SIFMA pointed to recent disruptions in crypto markets — including the October flash crash — as “timely reminders of why long-standing securities regulatory frameworks designed to preserve market quality and protect investors were originally created.”
The stance aligns with the position SIFMA took in July, when it opposed any SEC exemptive relief for blockchain or DeFi platforms issuing tokenized assets.
In November, the World Federation of Exchanges, representing major global stock exchanges, also urged the SEC to drop plans for an “innovation exemption” for crypto firms seeking to offer tokenized equities.
Ongoing Debate Over How to Regulate Tokenized Markets
The exchange of letters and statements highlights a widening divide between traditional financial institutions and the crypto sector over how tokenized securities should be treated under U.S. law. As the SEC continues collecting feedback, the debate over DeFi’s role in equity markets — and how much regulation should apply — shows no signs of slowing.
