DeFi Advocates Challenge Citadel’s Push for SEC Oversight Expansion

DeFi industry groups have mounted a coordinated rebuttal to Citadel Securities' call for expanded SEC oversight of decentralized finance protocols. In a Friday letter to regulators, the DeFi Education Fund, Andreessen Horowitz, and other prominent crypto organizations accused Citadel of advancing a "flawed analysis" of securities laws that could improperly extend registration requirements.

The conflict highlights growing tensions between traditional finance and decentralized systems as tokenization gains mainstream attention. SEC Chair Paul Atkins has recently emphasized balancing innovation with compliance, noting blockchain's potential to modernize capital markets while acknowledging unresolved regulatory questions.

Citadel's original complaint focused on decentralized trading protocols handling tokenized equities, which the market Maker argues should be subject to existing exchange and broker-dealer rules. The DeFi coalition counters that such interpretation would improperly regulate neutral technology rather than financial activity.