Citadel Causes Uproar For Urging Sec To Regulate Defi Tokenized Stocks
Citadel Securities argued that DeFi platforms offering tokenized US stocks should be regulated under securities laws and not get exemptive relief from the SEC.
Market maker Citadel Securities has recommended that the Securities and Exchange Commission tighten regulations on decentralized finance when it comes to tokenized stocks, causing backlash from crypto users.
Citadel Securities told the SEC in a letter on Tuesday that DeFi developers, smart-contract coders, and self-custody wallet providers should not be given “broad exemptive relief” for offering trading of tokenized US equities.
It argued that DeFi trading platforms likely fall under the definitions of an “exchange” or “broker-dealer” and should be regulated under securities laws if offering tokenized stocks.
“Granting broad exemptive relief to facilitate the trading of a tokenized share via DeFi protocols would create two separate regulatory regimes for the trading of the same security,” it argued. “This outcome would be the exact opposite of the “technology-neutral” approach taken by the Exchange Act.”
Citadel’s letter, made in response to the SEC looking for feedback on how it should approach regulating tokenized stocks, has drawn considerable backlash from the crypto community and organizations advocating for innovation in the blockchain space.
“Whoever thought Citadel would be against innovation that removes predatory, rent-seeking intermediaries from the financial system?” asked lawyer and Blockchain Association board member Jake Chervinsky on Thursday.
“Oh, right, literally every single person in crypto,” he added.
Uniswap founder Hayden Adams added that it “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.”
Summer Mersinger, CEO of the crypto advocacy group the Blockchain Association, said that “regulating software developers as if they were financial intermediaries would undermine US competitiveness, drive innovation offshore, and do nothing to advance investor protection.”
Source: CoinTelegraph
