Citadel urged the SEC to tighten regulations on tokenized stocks on DeFi platforms, drawing criticism from crypto lobbying groups.

According to a report by Cointelegraph, in response to Citadel's letter to the SEC earlier this month urging the SEC not to grant broad exemptions to DeFi platforms that would prohibit them from trading tokenized U.S. stocks, arguing that these platforms would likely be defined as "exchanges" or "brokerage firms" regulated under securities laws, cryptocurrency lobbying groups, including Andreessen Horowitz, the Uniswap Foundation, the DeFi Education Foundation, and the Digital Chamber of Commerce, have sent a letter to the SEC opposing Citadel Securities' request for the SEC to tighten regulations on tokenized stocks in the DeFi sector. "Citadel's letter is based on a flawed analysis of securities laws and attempts to extend SEC registration requirements to any entity with even the most indirect connection to DeFi trading." Furthermore, while acknowledging Citadel's goals of protecting investors and maintaining market integrity, they disagree that "achieving these goals always requires registration as a traditional U.S. SEC intermediary, and in some cases, a well-designed on-chain market cannot meet these objectives." The letter also criticized Citadel's definition of autonomous software as an intermediary, arguing that autonomous software cannot be a "middleman" in financial transactions because it "is not a person capable of exercising independent discretion or judgment."