The letter arrived as part of the SEC's public feedback process on regulating tokenized stocks.
Crypto Regulatory news
Citadel Securities has pushed the Securities and Exchange Commission to enforce stricter regulations on decentralized finance platforms that offer tokenized U.S. stocks. The firm argued against granting exemptive relief to DeFi developers and smart contract coders.
Citadel submitted a letter to the SEC on Tuesday stating that DeFi trading platforms likely qualify as exchanges or broker-dealers under existing securities laws. The firm contended that platforms offering tokenized stocks should be subject to the same regulatory requirements as traditional financial intermediaries.
The market maker warned against creating separate regulatory frameworks for tokenized shares traded via DeFi protocols. Citadel argued this approach would contradict the technology-neutral stance established by the Exchange Act and create inconsistent oversight.
The letter arrived as part of the SEC's public feedback process on regulating tokenized stocks. Citadel's position drew immediate criticism from crypto advocates and industry organizations focused on blockchain innovation.
Blockchain Association CEO Summer Mersinger stated that treating software developers as financial intermediaries would harm U.S. competitiveness and push innovation overseas. She added that the approach fails to advance investor protection while undermining technological progress.
Lawyer Jake Chervinsky questioned whether anyone expected Citadel to support innovation that removes rent-seeking intermediaries from finance. Uniswap founder Hayden Adams suggested the traditional market maker opposes open-source, peer-to-peer tech that can lower the barrier to liquidity creation.
The Securities Industry and Financial Markets Association released a similar statement to Citadel’s on Wednesday, supporting innovation while insisting tokenized securities maintain traditional investor protections. The group cited October's flash crash as evidence for maintaining established regulatory frameworks.
Citadel previously wrote to the SEC's Crypto Task Force in July, arguing that tokenized securities must succeed through genuine innovation rather than regulatory arbitrage. The World Federation of Exchanges urged the SEC in November to abandon plans for innovation exemptions on tokenized stocks.
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