Citadel Securities and the DeFi sector are debating regulatory issues in SEC communications.
Odaily Planet Daily reports that after investment giant Citadel Securities filed a 13-page letter with the SEC recommending stricter regulation of decentralized finance (DeFi) protocols that handle tokenized securities, the DeFi industry responded last Friday with its own letter, calling Citadel Securities' arguments "baseless."
In a new letter to the SEC jointly signed by the DeFi Education Fund, Andreessen Horowitz (a16z), DigitalChamber, Orca Creative, lawyer JW Verret, and Uniswap Foundation, it was stated that: "While we share Citadel Securities' goals regarding investor protection, market order, and the integrity of national market systems, we disagree that achieving these goals always requires registration as a traditional SEC intermediary, nor do we agree that in some cases these requirements cannot be met through well-designed on-chain markets."
Citadel Securities believes DeFi protocols may operate as exchanges or brokers requiring registration and regulation. However, under President Donald Trump, the new SEC leadership has been seeking more policy leeway for the crypto industry. White House crypto advisor Patrick Witt also posted on social media platform X that his office supports the "necessity of protecting software developers and DeFi."
A spokesperson for Citadel Securities stated in an email comment: "As we detailed in our comment letter, Citadel Securities strongly supports tokenization and other innovations that can solidify the U.S. leadership in digital finance, but this does not mean sacrificing stringent investor protections that make the U.S. stock market the global gold standard."
The DeFi Alliance responded that Citadel Securities' letter contained "numerous factual errors and misleading statements." Jennifer Rosenthal, a spokesperson for the DeFi Education Fund, stated that the company is protecting its business interests. Rosenthal said, "It is in Citadel Securities' interest to question the existence of a technology that threatens its business and significant market share."
