Following a 13-page letter from investment titan Citadel Securities that urged the U.S. Securities and Exchange Commission to tighten regulations on decentralized finance (DeFi) protocols managing tokenized securities, the industry rebutted with its own response on Friday, deeming the claims “groundless.”
“While we align with Citadel’s objectives regarding investor protections, market order, and the integrity of the national market system, we believe that these goals do not always require the registration of traditional SEC intermediaries and can, in some scenarios, be attained through well-designed on-chain markets,” stated the recent letter to the SEC, endorsed by the DeFi Education Fund, venture capital firm Andreessen Horowitz (a16z), the DigitalChamber, Orca Creative, attorney J.W. Verret, and the Uniswap Foundation.
Citadel Securities argued that DeFi protocols might function as exchanges or brokerages that require registration and oversight. However, the SEC’s new leadership under President Donald Trump has been looking for ways to provide the crypto sector with greater policy flexibility. Moreover, White House crypto advisor Patrick Witt recently announced on social media platform X that his office endorses the “need to safeguard software developers and DeFi.”
“As outlined in our comment letters, Citadel Securities is a strong advocate for tokenization and other advancements that can bolster America’s leadership in digital finance, but this does not necessitate compromising the stringent investor protections that have made U.S. equity markets the gold standard globally,” a company representative remarked in an emailed statement.
According to the DeFi coalition’s reply, Citadel’s letter included “numerous factual inaccuracies and misleading assertions.” Furthermore, DeFi Education Fund spokeswoman Jennifer Rosenthal suggested the firm is protecting its own business interests.
“It’s convenient for Citadel to challenge the validity of a technology that poses a threat to its operations and substantial market share,” Rosenthal commented.
