Citadel Demands SEC Crack Down: Regulate DeFi Like Traditional Stock Exchanges Now

Wall Street's heavyweight wants the rulebook thrown at decentralized finance.

The Institutional Push for Control

Citadel Securities, a titan of traditional finance, is publicly urging the U.S. Securities and Exchange Commission to bring the hammer down on DeFi protocols. Their argument? Treat them just like the NYSE or Nasdaq. It's a move that would impose a mountain of compliance—registration, surveillance, disclosure—on ecosystems built to operate without central gatekeepers.

A Clash of Philosophies

This isn't a gentle suggestion; it's a strategic volley in the battle for financial infrastructure's future. DeFi's core promise—permissionless, transparent, and automated markets—runs directly counter to the centralized control and intermediation that firms like Citadel profit from. Calling for 'same activity, same regulation' sounds reasonable in a Washington hearing room but ignores the fundamental innovation at play: code as counterparty.

The Compliance Quagmire

Applying exchange rules to decentralized protocols creates a paradox. Who registers? The anonymous developers? The token holders? The smart contracts themselves? The push seeks to force decentralized technology into a regulatory box designed for a completely different century, a classic move by incumbents who'd rather tame innovation than compete with it. After all, nothing protects legacy profit margins like a well-placed regulatory moat.

The Stakes for Crypto's Future

The SEC's response will signal whether the U.S. aims to nurture a new financial paradigm or forcibly retrofit it into the old one. For the DeFi space, it's a wake-up call. The era of flying under the radar is over. The coming fight won't just be about technology—it'll be a brutal political and legal war for the soul of the market. And as usual in finance, the loudest calls for 'protecting the investor' often come from those most invested in protecting themselves.

DeFi platforms already function like exchanges

Citadel noted that many DeFi systems already operate like exchanges by using automated methods, such as algorithms, to match buyers and sellers. Some DeFi participants, like wallet providers, automated market makers, and trading apps, also act like broker-dealers because they earn money from transactions.

The firm cautioned that sweeping exemptions could undermine key protections in U.S. markets, including fair access, transparency after trades, market monitoring, and anti-front-running measures. Citadel called for the SEC to follow formal notice-and-comment rulemaking rather than offering broad exceptions.

“Realizing the potential benefits of tokenization requires applying the key bedrock principles and investor protections that underpin the fairness, efficiency, and resiliency of U.S. equity markets,” the letter said.

Pushback from the crypto community 

The letter drew criticism from the crypto space. In an X post, Hayden Adams, founder of Uniswap, accused Citadel CEO Ken Griffin of “coming for DeFi,” calling out the claim that decentralized protocols cannot provide “fair access.”

“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,” Adams wrote. 

First Ken Griffin screwed over Constitution DAO

Now he's coming for DeFi, asking the SEC to treat software developers of decentralized protocols like centralized intermediaries

Bet Citadel has been lobbying behind closed doors on this for years

Okay thats all pretty bad, but… pic.twitter.com/ExoNhbhadu

Summer Mersinger, CEO of the Blockchain Association, also criticized Citadel’s suggestion. She said it was “overbroad and unworkable” and that treating software developers like financial companies could harm U.S. innovation and push tech work to other countries.

In short, Citadel argued that DeFi platforms need clear rules to avoid gaps in investor protection, while the crypto industry stressed that excessive regulation could slow innovation. The debate highlights the ongoing tension between traditional finance and decentralized systems. How the SEC responds to this may shape the future of tokenized equities and determine whether DeFi platforms follow the same rules as stock exchanges.

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