Blockchain Association Challenges Citadel on DeFi Regulation

The Blockchain Association has formally challenged Citadel Securities' stance on decentralized finance (DeFi) regulation, responding to the market maker's December letter to the SEC. The association argues that DeFi protocol developers do not function as brokers or dealers and do not operate exchanges, thus should not be categorized under existing frameworks designed for human-operated intermediaries. This dispute arises as the SEC is preparing to solicit public comment on a proposed innovation exemption, potentially creating a regulatory sandbox for on-chain assets. The core of the disagreement centers on how to classify and regulate DeFi protocols amidst the growing tokenization of financial markets.