Citadel Securities' letter to the U.S. Securities and Exchange Commission (SEC), calling for decentralized finance (DeFi) platforms and tokenized U.S. stocks to be regulated like traditional exchanges and brokers, has sparked debate among experts.
In a Dec. 2 letter to SEC Secretary Vanessa Countryman, Citadel said tokenized stocks could make trading faster, improve settlement, and give investors more options. But the firm stressed these benefits need to come with the same protections that keep markets fair and safe.
“Ultimately, tokenized securities must succeed on the merits, rather than via regulatory exemptions; therefore, while we support Commission initiatives to champion innovation and position the U.S. as the leader in digital finance, it is important not to override key investor protections when trading tokenized securities,” the letter reads.
The debate reflects ongoing questions around how regulators can best integrate digital assets into U.S. financial markets.
Some in the crypto community quickly criticized Citadel’s push. Hayden Adams, founder of Uniswap, said in a post on X that the firm’s proposal could treat software developers of decentralized protocols like centralized intermediaries.
He argued that the move seems aimed at restricting open-source, peer-to-peer technology that can expand access to liquidity.
“Okay that’s all pretty bad, but the actual nerve for one of their arguments to be that there is no way for DeFi protocols to provide ‘fair access’ of all things lmao,” Adams wrote. “Makes sense [that] the king of shady tradfi market makers doesn't like open source, peer-to-peer tech that can lower the barrier to liquidity creation.”
Other industry voices offered a different view. Armani Ferrante, founder and CEO of Backpack, MadLads, and Anchorlang, responded on X that the term “DeFi” covers a wide range of platforms.
He argued that some platforms could still allow unfair market access, even if well-known projects like Uniswap do not. “You're holding yourself to Uniswap standards, which most don't live by,” Ferrante said.
Citadel’s Recommendations
In its letter, Citadel asked the SEC to name all companies involved in tokenized stock trading (including decentralized trading protocols), follow existing rules, and make any updates through public notice-and-comment.
The company also said that many DeFi platforms already act like exchanges or brokers, matching buyers and sellers, using automated rules for trades, and sometimes charging fees.
Other platforms in the space, like Ondo Finance, have also raised concerns about tokenized trading, warning that unclear settlement processes could give larger institutions an unfair advantage and make it harder for smaller players to compete.
This comes at a time when the SEC has been increasing its focus on regulating crypto, DeFi platforms, and tokenized assets. On Dec. 2, SEC Chair Paul Atkins revealed that the regulator is preparing a long-awaited “innovation exemption” for crypto firms, aimed at making it easier to launch on-chain products under formal oversight.
However, the move quickly sparked debate, with Wall Street exchanges warning that exemptions could lessen investor protections and create an unfair advantage for digital asset platforms.
