Citadel Securities and DeFi Coalition Clash Over SEC Regulation of Tokenized Securities
On December 12, 2025, Citadel Securities sent a 13-page letter to the U.S. Securities and Exchange Commission (SEC) urging closer regulatory oversight of decentralized finance (DeFi) protocols that handle tokenized securities potentially functioning as exchanges or brokerages. Citadel contends that these DeFi protocols may operate as exchanges or brokerages and therefore require registration and regulation under existing securities laws.
In response, a DeFi coalition—including the DeFi Education Fund, a16z, DigitalChamber, Orca Creative, J.W. Verret, and the Uniswap Foundation—argued to the SEC that on-chain markets can deliver investor protections without the need for traditional registration. They emphasized shared goals of investor protections and market integrity but rejected mandatory registration as intermediaries, proposing instead thoughtfully designed on-chain regulatory approaches.
The dispute highlights a broader regulatory clash between traditional finance seeking stricter oversight and DeFi advocates pushing for tailored, on-chain regulations. A spokesperson for Citadel reaffirmed support for tokenization and innovation while maintaining that investor protections must be preserved, asserting that such protections do not require sacrifice.
Meanwhile, Jennifer Rosenthal, a spokesperson for the DeFi Education Fund, characterized Citadel’s statements as mischaracterizations and accused the firm of protecting its business interests, suggesting that their critique serves to maintain their market position. Around the same time, White House crypto adviser Patrick Witt stated on X that the administration supports protecting software developers and the DeFi sector.
The SEC, described as under new management in 2025 and seeking more policy flexibility for the crypto sector under President Donald Trump, remains the focal point of this ongoing debate.
