Citadel Securities has requested the U.S. Securities and Exchange Commission (SEC) to impose stricter regulations on decentralized finance (DeFi) platforms dealing with tokenized stocks. The firm argues that DeFi platforms, smart contract developers, and individuals managing their own wallets should not receive broad exemptions when facilitating tokenized trading of U.S. stocks. Citadel maintains that these platforms effectively operate as exchanges or broker-dealers and therefore must be regulated under existing securities laws to ensure investor protection. This appeal follows the SEC’s solicitation of public comments on regulating tokenized stocks, which has sparked criticism from the crypto community and blockchain advocates. Legal counsel for the Blockchain Association, Jack Chervinsky, stated that Citadel’s stance opposes innovative technology that eliminates financial intermediaries. Hayden Adams, founder of Uniswap, criticized traditional financial market makers for resisting open-source and peer-to-peer technologies that reduce liquidity barriers. Blockchain Association CEO Summer Mersinger warned that regulating software developers as financial intermediaries could harm American innovation and competitiveness. In July, Citadel had previously told the SEC’s Crypto Task Force that tokenized securities should succeed through genuine innovation and market performance rather than regulatory loopholes. Similarly, the Securities Industry and Financial Markets Association (SIFMA) has supported investor protections for tokenized securities equivalent to traditional financial instruments, citing recent crypto market volatility, such as the October flash crash, as justification for stronger regulation. The Global Exchange Federation also urged the SEC to reconsider plans to grant crypto firms an “innovation exemption.” These demands and criticisms emerge amid accelerating efforts worldwide to establish regulatory frameworks for DeFi and cryptocurrencies to safeguard investors and maintain financial stability.
Source: binance
