The DeFi industry alliance has sent a letter to the SEC refuting Citadel Securities' recommendations for "strengthening DeFi regulation."

According to Mars Finance, following a 13-page letter from hedge fund giant Citadel Securities to the U.S. Securities and Exchange Commission (SEC) recommending stricter regulation of decentralized finance (DeFi) protocols handling tokenized securities, the industry responded on Friday with a joint letter, directly calling its arguments "baseless." The letter, co-signed by the DeFi Education Foundation, venture capital firm Andreessen Horowitz (a16z), the Chamber of Digital Commerce, Orca Creative, lawyer JW Verret, and the Uniswap Foundation, stated to the SEC: "While we agree with Citadel's goals regarding investor protection, market order, and the integrity of national market systems, we object to its view that 'achieving these goals always requires registration with traditional SEC intermediaries and cannot be achieved through carefully designed on-chain markets in certain circumstances.'" Citadel Securities insists that DeFi protocols may operate as exchanges or brokers requiring registration and regulation. However, the new SEC leadership under the Trump administration has been seeking to give the crypto industry more policy space this year. White House crypto advisor Patrick Witter recently posted on social media platform X, stating that his office supports the "necessity of protecting software developers and DeFi." "As we detailed in our letter, Citadel Securities strongly supports tokenization and other innovations that can solidify U.S. leadership in digital finance, but this should not come at the expense of robust investor protections—the very protections that make the U.S. stock market the global gold standard," a company spokesperson stated in an email. The DeFi Alliance responded by pointing out that Citadel's letter contained "numerous factual errors and misleading statements." Jennifer Rosenthal, a spokesperson for the DeFi Education Foundation, implied that the organization was protecting its own business interests: "For Citadel, it's quite convenient to question the existence of a technology that threatens its business and significant market share."