Citadel Securities is urging U.S. regulators to maneuver cautiously as they assess whether or not to grant exemptions that might permit Individuals to commerce tokenized U.S. equities on decentralized finance (DeFi) platforms.
In a 13-page letter to the Securities and Trade Fee (SEC), the agency said that tokenization might improve settlement, shareholder engagement, and investor selection. However it warned that the advantages will solely materialize if core investor protections stay intact.
The corporate mentioned tokenized shares ought to “succeed on the deserves,” not by way of particular regulatory breaks that place them exterior the framework governing conventional equities.
Citadel: DeFi Platforms Operate Like Exchanges
A significant focus of the letter is the declare by some crypto advocates that DeFi protocols permit “peer-to-peer” buying and selling with out intermediaries. Citadel argued that is inaccurate.
In keeping with the agency, many DeFi programs meet the authorized definition of an alternate as a result of they convey collectively consumers and sellers utilizing established, automated guidelines. Citadel mentioned the know-how could differ, however the perform is identical.
Let’s be actual: if the SEC begins treating each tokenized inventory prefer it’s a safety + crypto hybrid, 90 % of the tasks die in a single day and Citadel simply retains printing cash the previous manner. This letter is self-preservation dressed as innovation.
— Rei (@KyoMemes) December 4, 2025
The agency additionally pointed to the involvement of builders, governance our bodies, pockets suppliers, buying and selling apps, automated market makers, and liquidity suppliers. These teams, Citadel mentioned, usually play roles much like brokers or sellers as a result of they route orders, cost charges, or affect commerce execution.
Warning In opposition to Two Separate Rulebooks
Citadel additionally pushed again towards business requests for broad exemptive aid.
Granting such aid, the agency mentioned, would create “two separate regulatory regimes” for the identical safety — one strict for conventional markets and one lenient for tokenized markets.
The agency argued that this is able to violate the know-how-impartial rules of U.S. securities legislation and danger exposing retail buyers to unregulated intermediaries.
Citadel mentioned the SEC lacks authority to waive key protections tied to exchanges and dealer-sellers and emphasised that hundreds of thousands of Individuals depend on fairness markets for retirement safety.
Learn between the strains of Citadel’s “everybody in crypto is an middleman” letter to the SEC and also you see an try to ascertain standing for a lawsuit as soon as the SEC adopts its lengthy-promised innovation exemption.
TradFi’s about to run the crypto coverage playbook circa 2023. Glhf!
— Jake Chervinsky (@jchervinsky) December 5, 2025
Calls for a Clear Regulatory Path
The agency really helpful that the SEC:
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Determine all intermediaries in tokenized fairness buying and selling, together with these working by way of DeFi protocols.
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Keep away from granting sweeping exemptions from alternate and dealer-vendor guidelines.
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Use formal rulemaking and give attention to bettering clearing and settlement.
Citadel concluded that innovation ought to proceed, however not on the expense of market integrity and investor security. This letter comes amid altering US laws. The SEC not too long ago hinted that each one markets could go on-chain in as early as two years time.
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