Coinbase Champions Regulatory Flexibility in SEC’s DeFi Debate

On December 5, 2025, a pivotal meeting of the U.S. Securities and Exchange Commission's (SEC) Investor Advisory Committee became the stage for a fundamental clash between traditional finance and the cryptocurrency industry. The core of the debate revolved around the regulation of tokenized securities and the burgeoning decentralized finance (DeFi) ecosystem. Representing the crypto sector, Coinbase, a leading digital asset exchange, advocated strongly for a flexible and innovation-friendly regulatory framework. This position was directly challenged by Citadel Securities, a titan of Wall Street's traditional market structure, which argued for stringent and comprehensive oversight of DeFi activities. The confrontation highlights the SEC's ongoing struggle to define its regulatory approach as blockchain technology continues to disrupt established financial markets. The committee's discussion underscores the growing pains of integrating novel, decentralized systems into a regulatory landscape built for centralized intermediaries. Coinbase's argument centers on the need for rules that allow for technological evolution and market growth without stifling innovation, positioning regulatory clarity as essential for the safe development of tokenized assets. This high-stakes regulatory tension between established financial giants and crypto-native platforms like Coinbase will significantly influence the future structure, accessibility, and legitimacy of digital securities markets in the United States and beyond.

SEC Grapples with DeFi Regulation as Citadel and Coinbase Clash Over Tokenized Securities

Wall Street heavyweights and crypto leaders collided at an SEC Investor Advisory Committee meeting, revealing deep divisions over how to regulate tokenized securities. Citadel Securities pushed for stringent oversight of decentralized finance, while Coinbase advocated for regulatory flexibility—a tension reflecting broader growing pains as blockchain disrupts traditional markets.

The debate centers on tokenization, the process of converting real-world assets like equities into blockchain-based tokens. Citadel's warnings about DeFi risks contrast sharply with Coinbase's argument for tailored rules that foster innovation. SEC Chair Gary Gensler's cautious support for blockchain technology did little to bridge the gap between crypto natives and institutional players.

Market makers see unchained finance as a threat to stability; crypto exchanges view it as inevitable progress. This regulatory standoff comes as tokenized U.S. Treasuries surpass $1 billion—proof that asset digitization won't wait for consensus.