Citadel’s SEC Push to Regulate DeFi Stocks Sparks Backlash

Crypto News Regulation

Citadel’s SEC Plea to Regulate DeFi Stocks Triggers Industry Backlash

Written by Aaron S.,

Editor-In-Chief

Last Updated: December 04, 2025

Key Takeaways

Citadel asked the SEC to impose stricter rules on DeFi platforms that trade tokenized US stocks, which sparked debate across the crypto industry;
The firm argued that DeFi services offering tokenized shares function like exchanges or brokers and should face standard securities laws;
Crypto leaders, including Uniswap’s founder and industry lawyers, criticized Citadel’s stance as an attack on open, peer-to-peer innovation.

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Citadel’s SEC Plea to Regulate DeFi Stocks Triggers Industry Backlash

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Citadel Securities has stirred controversy after asking the US Securities and Exchange Commission (SEC) to enforce tighter controls on decentralized finance (DeFi) platforms that trade tokenized shares.

In a letter sent to the SEC, the trading firm said that developers, smart-contract creators, and self-custody wallet providers should not receive “broad exemptive relief” for activities involving tokenized US equities.

Citadel argued that these platforms operate in ways similar to regulated exchanges or broker-dealers and should be treated as such under securities law.

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The company’s letter noted that allowing DeFi-based stock trading under lighter rules could split the market into two systems, one regulated and one not, for the same asset. It stated:

Granting broad exemptive relief to facilitate the trading of a tokenized share via DeFi protocols would create two separate regulatory regimes for the trading of the same security.

It added that this approach would contradict the “technology-neutral” principle of the Exchange Act.

Uniswap UNI $6.07 founder Hayden Adams responded on X that it "makes sense the king of shady TradFi market makers doesn’t like open source, peer-to-peer tech that can lower the barrier to liquidity creation".

Lawyer and Blockchain Association board member Jake Chervinsky also commented, "Whoever thought Citadel would be against innovation that removes predatory, rent-seeking intermediaries from the financial system?"

On December 2, Federal Reserve Vice Chair for Supervision Michelle Bowman faced questions from Representative Stephen Lynch about her past comments on digital assets. What did Bowman say? Read the full story.