DeFi Groups Oppose Citadel Securities' Proposals for Stricter Regulation of Tokenized Stocks in the US

Recently, Citadel Securities, one of the largest market makers, sent a letter to the U.S. Securities and Exchange Commission (SEC), calling for the full identification of intermediaries involved in trading tokenized stocks, including decentralized trading protocols. In Citadel's view, such protocols often resemble exchanges or broker-dealers according to the SEC's current classification.

The Citadel letter, dated December 2, 2025, emphasizes that focusing on technology rather than services could undermine the regulatory treatment of registered firms. The company supports tokenization but stresses the need to maintain investor protections. As noted by Stephen John Berger, Citadel's global head of government and regulatory policy, decentralized platforms should not receive broad exemptions from regulation, as this could lead to risks for investors.

In response, on December 12, 2025, a coalition of DeFi organizations, including the DeFi Education Fund, Andreessen Horowitz, The Digital Chamber, Uniswap Foundation, and others, sent their own appeal to the SEC. They stated that:

"Citadel's letter is based on a flawed analysis of securities laws, which attempts to extend SEC registration requirements to virtually any organization with even the most indirect connection to DeFi transactions".

The groups argue that autonomous software and technological infrastructure do not qualify as intermediaries under SEC definitions, as traders retain control over their assets, and developers do not exercise custody or control.

This dispute is taking place amid growing interest in asset tokenization, such as stocks and U.S. Treasury bonds. On the same day, December 12, the SEC issued a no-action letter to the Deposit Trust Company, allowing the tokenization of certain securities, including components of the Russell 1000 and Treasury bonds. The new SEC Chair Paul Atkins has expressed a positive stance toward innovations in capital markets but emphasized the need for paths to regulatory compliance.

Experts believe that the SEC's response to these letters will be a key signal for the future of DeFi regulation in the US. On one hand, traditional players like Citadel seek a level playing field; on the other, the DeFi community fears that excessive regulation will stifle innovation. The debates continue, and the industry is closely watching the regulator's next steps.