The cryptocurrency industry has responded to Citadel Securities' call for the Securities and Exchange Commission (SEC) to strengthen regulation of decentralized finance (DeFi). They directly refuted Citadel's letter, claiming it was based on "distortions of facts" and "misleading claims."
Major crypto organizations, including Andreessen Horowitz, the Uniswap Foundation, the Chamber of Digital Commerce, and the DeFi Education Fund, sent a joint letter to the SEC last Friday, arguing that Citadel's arguments are legally misinterpreted and disconnected from market realities. The issue began with a letter Citadel submitted earlier this month, arguing that DeFi platforms trading tokenized U.S. stocks should be considered "exchanges" or "broker-dealers" and required to register under securities laws.
Cryptocurrency groups countered, saying Citadel's analysis "overly broadens the scope of securities law, making any entity simply involved in DeFi transactions subject to registration." While they agree with the ultimate goal of investor protection and market integrity, they emphasized that these goals are not necessarily achieved solely through existing SEC broker-dealer registration, and that sophisticated on-chain market design is sufficient, depending on the circumstances.
In particular, they countered that Citadel considered automated smart contract software to be an โintermediary,โ arguing that โsoftware is not a person with independent judgment, cannot exercise discretion, and should not be viewed as a human intermediary in financial transactions.โ
They also argued that directly applying securities laws to DeFi platforms is an unrealistic demand that ignores their technical characteristics and operational methods. They warned, "The DeFi ecosystem is completely different from traditional intermediaries, and tying them to the same regulatory framework would be excessive."
This controversy highlights the growing conflict over the extent of the SEC's regulatory authority as tokenized stock markets and decentralized ecosystems expand. The market anticipates a continued power struggle between the industry and regulators over regulatory clarity for DeFi developers and users.
๐ Market Interpretation
Depending on how far the legal framework for tokenized assets, as highlighted by the SEC and Citadel, expands, the scope for DeFi projects and tokenized asset platforms to operate could drastically change.
๐ก Strategy Points
With anticipated regulatory changes related to DeFi in the future, projects that enhance on-chain transparency or seek connections with existing securities systems may attract attention.
๐ Glossary
Tokenized stocks are digital assets based on actual stocks, designed to be traded on a blockchain.
A 'broker-dealer' is an intermediary that buys and sells securities on behalf of its clients and is registered and regulated by the SEC.
An 'on-chain market' refers to an ecosystem where transactions are automatically concluded and settled through blockchain smart contracts, without a centralized intermediary.
TP AI Precautions
This article was summarized using a TokenPost.ai-based language model. Key points in the text may be omitted or inaccurate.
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