Debate Over Regulation of Tokenized Securities in DeFi Intensifies

According to Odaily, Citadel Securities recently submitted a 13-page letter to the SEC advocating for stricter regulations on decentralized finance (DeFi) protocols handling tokenized securities. In response, the DeFi industry issued its own letter last Friday, challenging Citadel Securities' arguments as "unfounded." The new letter to the SEC, signed by DeFi Education Fund, Andreessen Horowitz (a16z), DigitalChamber, Orca Creative, J.W. Verret, and Uniswap Foundation, stated, "While we share Citadel Securities' goals of investor protection, market order, and the integrity of the national market system, we disagree that achieving these goals always requires registration like traditional SEC intermediaries, nor do we agree that these requirements cannot be met through well-designed on-chain markets in certain cases." Citadel Securities argues that DeFi protocols might operate as exchanges or brokers requiring registration and regulation. However, under U.S. President Donald Trump's administration, the SEC's new leadership has been seeking more policy flexibility for the crypto industry. White House crypto advisor Patrick Witt also expressed support on social media platform X for "the necessity of protecting software developers and DeFi." A spokesperson for Citadel Securities commented via email, "As detailed in our comment letter, Citadel Securities strongly supports tokenization and other innovations that can strengthen America's leadership in digital finance, but this does not mean sacrificing stringent investor protection measures, which make the U.S. stock market the global gold standard." The DeFi alliance's response claimed that Citadel Securities' letter contained "multiple factual misstatements and misleading claims." Jennifer Rosenthal, a spokesperson for DeFi Education Fund, stated that the company is safeguarding its commercial interests. Rosenthal remarked, "Citadel Securities questions the existence of a technology that threatens its business and significant market share, which aligns with its interests."