DeFi Industry Alliance Writes Letter to SEC Refuting Citadel Securities' "Enhanced DeFi Regulation" Proposal

BlockBeats News, December 13th, in response to hedge fund giant Citadel Securities submitting a 13-page letter to the U.S. Securities and Exchange Commission suggesting strengthened regulation of decentralized finance protocols handling tokenized securities, the industry on Friday issued a joint response in the form of a letter directly addressing that its argument is "baseless."

This letter addressed to the SEC, co-signed by the DeFi Education Fund, venture capital firm Andreessen Horowitz (a16z), the Chamber of Digital Commerce, Orca Creative, lawyer J.W. Verret, and the Uniswap Foundation, stated: "While we agree with Citadel's goals of investor protection, market order, and the integrity of the national market system, we disagree with its view that 'achieving these goals always requires traditional SEC intermediary registration and cannot be achieved in some cases through carefully designed on-chain markets.'"

Citadel Securities argued that DeFi protocols could operate as exchanges or brokers requiring registration and regulation. However, the new SEC leadership under the Trump administration has been seeking to provide greater policy space for the crypto industry. White House crypto advisor Patrick Viter just posted on social platform X stating that his office supports "the need to protect software developers and DeFi." "As detailed in our opinion letter, Citadel Securities strongly supports tokenization and other innovations that can solidify America's leadership in digital finance, but this should not come at the expense of sacrificing strict investor protection—these protections are what make the U.S. stock market the global gold standard," a company spokesperson said in an email statement.

In response, the DeFi Alliance pointed out that Citadel's letter contains "multiple factual inaccuracies and misleading statements." A spokesperson for the DeFi Education Fund, Jennifer Rosenthal, suggested that the organization is defending its own business interests: "For Citadel, questioning the existence of a technology that threatens its business and significant market share is quite convenient."