Citadel Securities vs DeFi: The Debate Over Regulation of Tokenized Markets.
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Citadel Securities sent a 13-page letter to the U.S. Securities and Exchange Commission (SEC) arguing that DeFi protocols handling tokenized securities should face stricter regulation. According to Citadel, many DeFi platforms effectively function like exchanges or brokerages, and therefore should be required to register under traditional SEC rules to ensure investor protection and maintain orderly markets.
In response, the DeFi sector submitted its own letter to the SEC, calling Citadelโs arguments baseless. The response was signed by organizations such as the DeFi Education Fund, Andreessen Horowitz (a16z), and the Uniswap Foundation. These groups argue that investor protection and fair markets do not always require traditional registration, and that well-designed on-chain markets can achieve the same goals in innovative ways.
DeFi advocates also claim that Citadel is mainly trying to protect its business interests, as DeFi poses growing competition to traditional financial firms. Meanwhile, the SEC under the Trump administration has shown signs of giving the crypto industry more flexibility, adding more importance to this debate over DeFiโs future regulation.
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