The investing giant had asked the U.S. Securities and Exchange Commission to treat DeFi players like regulated entities, and the DeFi crowd pushed back.
Dec 12, 2025, 10:20 p.m.
After a 13-page letter from investment powerhouse Citadel Securities advised the U.S. Securities and Exchange Commission that decentralized finance (DeFi) protocols handling tokenized securities demand a closer regulatory grip, the industry answered back with its own correspondence on Friday, calling the arguments “baseless.”
“While we share Citadel’s aims with respect to investor protections, orderly markets, and the integrity of the national market system, we disagree that achieving these goals always necessitates registration as traditional SEC intermediaries and cannot, in certain circumstances, be met through thoughtfully designed onchain markets,” according to the new letter to the SEC, signed by the DeFi Education Fund, venture capital firm Andreessen Horowitz (a16z), the DigitalChamber, Orca Creative, lawyer J.W. Verret and the Uniswap Foundation.
Citadel Securities contended that DeFi protocols may operate as exchanges or brokerages in need of registration and regulation. However, this year’s new management of the SEC under President Donald Trump has been seeking ways to give the crypto industry more policy leeway. And White House crypto adviser Patrick Witt just posted on social media site X that his office supports the “need to protect software developers and DeFi.”
“As detailed in our comment letters, Citadel Securities strongly supports tokenization and other innovations that can reinforce America’s leadership in digital finance, but this does not require sacrificing the rigorous investor protections that have made U.S. equity markets the global gold standard,” a spokesperson said in an emailed comment.
Citadel’s letter included “several factual mischaracterizations and misleading statements,” according to the DeFi coalition’s response. And a DeFi Education Fund spokeswoman, Jennifer Rosenthal, suggested the firm is protecting its business interests.
“It is convenient for Citadel to question the existence of a technology that threatens its business and significant market share,” Rosenthal said.
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