Industry Organizations Challenge Effort to Apply Traditional Securities Laws to DeFi Platforms
Several leading crypto and blockchain advocacy groups have criticized Citadel Securities for urging regulators to impose tighter rules on decentralized finance platforms that facilitate tokenized stocks. The response comes as regulators review how existing securities laws should apply to onchain representations of traditional assets.
In a joint letter to the U.S. Securities and Exchange Commission, organizations including Andreessen Horowitz, the Uniswap Foundation, and major industry advocacy groups said Citadel’s position relies on mischaracterizations of how DeFi systems function. The groups argued that Citadel’s interpretation would effectively require any entity with minimal interaction with a DeFi transaction to register as a securities intermediary.
While agreeing on the importance of investor protection and market integrity, the coalition said these goals do not always require DeFi platforms to operate as traditional exchanges or broker-dealers. Instead, they argued that carefully designed onchain markets can meet regulatory objectives through alternative structures.
The letter also rejected the idea that autonomous software protocols should be treated as financial intermediaries, noting that code cannot exercise discretion or judgment like a regulated entity. Applying securities registration rules to decentralized platforms, the groups warned, would be impractical and overly broad, potentially capturing activities far beyond conventional trading services.
Citadel has countered that exempting DeFi platforms could create uneven regulatory regimes for the same assets, reducing transparency and oversight. The debate underscores growing tension as regulators seek public input on how to govern tokenized equities — a sector expected to expand significantly as tokenization gains momentum in the U.S. financial system.
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