A sharp political clash erupted in Washington, as Citadel Securities and a broad coalition from the decentralized finance (DeFi) sector presented sharply conflicting action plans on how the U.S. Securities and Exchange Commission (SEC) should handle tokenized stocks. This hardened stance embodies the growing tension between Wall Street’s centralized market model and the emerging decentralized architecture on the blockchain.
Citadel Securities' Position:
* Rather than treating tokenized assets as an experimental angle in the market, Citadel urges the SEC to fully and directly integrate them into the existing regulatory framework for securities.
* The company informed the authority that many decentralized finance (DeFi) protocols already mimic the core functions of the stock exchange by algorithmically matching buyers and sellers.
* They cautioned that splitting regulatory systems between tokenized and traditional versions of the same stock would violate the SEC's long-standing principle of 'technology neutrality.'
* Citadel argues that allowing decentralized trading to operate outside the monitoring and reporting standards for traditional stock markets could lead to fragmentation and a withdrawal of liquidity from the tightly regulated system that underpins the credibility of the American market.
Decentralized Finance Coalition's Position:
* Decentralized finance groups - including the DeFi Education Fund, a16z, the Digital Chamber, and the Uniswap Foundation - responded with a completely different narrative.
* The coalition rejected the idea that open-source protocol code should be regulated like human intermediaries.
* They warned that attempting to classify independent developers or smart contracts as brokers/traders is legally and practically nonsensical and risks pushing innovation outside.
* The groups pointed out that Citadel's stance may reflect a self-serving competitive interest, arguing that tokenized markets offer efficiencies and transparency that can challenge entrenched players.
* In their view, investor protection can be embedded directly into on-chain mechanisms without forcing decentralized finance into the same operational structure that governs traditional brokerage and exchange platforms.
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