Citadel Urges SEC to Scrutinize DeFi Protocols, Drawing Strong Pushback From Crypto Industry
Citadel Securities asked the SEC to regulate certain DeFi systems like traditional exchanges, causing significant backlash from the crypto community.Summary
Citadel Securities submitted a letter to the U.S. Securities and Exchange Commission (SEC) arguing that certain decentralized finance (DeFi) protocols dealing with tokenized U.S. equities function similarly to regulated market infrastructure and should therefore face comparable oversight.
This submission, made during an SEC consultation on applying federal securities laws to crypto platforms, sparked immediate outrage across the crypto industry on social media. Critics, including Uniswap creator Hayden Adams, contended that Citadel's stance effectively sought to treat open-source developers as centralized intermediaries and unfairly challenged the permissionless nature of DeFi.
The letter suggested that because these automated protocols bring buyers and sellers together via preset rules, they might meet the definitions for exchanges or broker-dealers, especially when handling securities-linked products. Citadel warned that inconsistent oversight between tokenized and traditional markets could create transparency and compliance gaps, advocating for regulatory relief only after a thorough examination of investor protection implications.
(Source：CoinDesk)