Market maker’s call for tighter oversight sparks backlash from crypto leaders and policy advocates
A new regulatory flashpoint has emerged after Citadel Securities urged the SEC to impose full securities oversight on DeFi platforms offeringg tokenized U.S. stocks, prompting strong criticism from blockchain industry voices. The firm’s comments were submitted as part of the SEC’s ongoing review of how tokenized equities should be governed.
Citadel’s Call for Stricter Rules
In its letter, Citadel argued that platforms enabling tokenized equity trading should not receive broad exemptive relief, insisting they fall under the definitions of an exchange or broker-dealer. The firm warned that creating a separate compliance pathway for DeFi Citadel’s Call for Stricter Rules
would undermine the “technology-neutral” foundation of federal securities law.
A regulatory attorney following the issue said the filing reflects “growing pressure from traditional market operators who want uniform oversight for all equity-linked trading, regardless of the technology behind it.”
Crypto Advocates Push Back
The response from the crypto community was swift. Industry experts highlighted that imposing full securities compliance on developers, smart-contract coders, and wallet providers could severely restrict U.S. blockchain innovation. Others argued that open-source, peer-to-peer systems reduce reliance on large market makers — a shift some believe entrenched firms fear.
Citadel’s stance mirrors arguments from major financial trade associations. SIFMA recently reiterated that tokenized securities must remain subject to long-standing investor-protection rules, pointing to recent crypto-market volatility as evidence of the need for consistent guardrails.
Meanwhile, global exchange organizations have urged the SEC to reject “innovation exemptions” for tokenized-stock platforms, arguing that different regulatory regimes could fragment markets.
The debate underscores a broader clash between traditional financial firms seeking uniform regulation and DeFi advocates pushing for frameworks that distinguish software development from financial intermediation. As the SEC evaluates its approach, the future of tokenized equities in the U.S. may hinge on which vision prevails.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.