The DeFi Industry Alliance sent a letter to the SEC rebutting Citadel Securities' proposal for "enhanced DeFi regulation."

After hedge fund giant Citadel Securities submitted a 13-page letter to the U.S. Securities and Exchange Commission suggesting that regulation of decentralized finance protocols handling tokenized securities should be strengthened, the industry responded on Friday with a joint letter, directly calling its arguments "baseless." The letter, co-signed by the DeFi Education Fund, venture capital firm Andreessen Horowitz (a16z), the Digital Chamber of Commerce, Orca Creative, attorney J.W. Verret, and the Uniswap Foundation, stated: "While we agree with Citadel on the goals of investor protection, market order, and the integrity of the national market system, we oppose their view that 'achieving these goals always requires traditional SEC intermediary registration and cannot be accomplished through well-designed on-chain markets in specific cases.'"

Citadel Securities insists that DeFi protocols could operate as exchanges or brokers that require registration and regulation. However, the new SEC leadership under the Trump administration has been seeking to provide greater policy space for the crypto industry this year. White House crypto advisor Patrick Harker recently stated on social media platform X that his office supports "the necessity of protecting software developers and DeFi." "As we detailed in our opinion letter, Citadel Securities strongly supports tokenization and other innovations that can solidify the U.S. digital finance leadership, but this should not come at the expense of strict investor protections—these protections are what make the U.S. stock market the global gold standard," a company spokesperson stated in an email. The DeFi Alliance responded by pointing out that Citadel's letter contains "multiple factual inaccuracies and misleading statements." DeFi Education Fund spokesperson Jennifer Rosenthal suggested that the organization is defending its own business interests: "For Citadel, questioning the existence of a technology that threatens its business and significant market share is quite convenient."