The tension between decentralized finance and traditional Wall Street players resurfaced this week after Uniswap founder Hayden Adams publicly accused Citadel Securities of influencing U.S. regulators to impose stricter rules on the DeFi sector. Adams’ comments, shared across social media, sparked a wide-ranging debate over who should be considered a financial intermediary in blockchain-based markets, and whether the rules of traditional finance should apply to open-source developers. Adams claimed that Citadel, led by CEO Ken Griffin, has been lobbying the U.S. Securities and Exchange Commission (SEC) to classify DeFi developers, validators, liquidity providers and even front-end operators as broker-dealers. Citadel’s Filing Raises Concerns Over Tokenized Markets At the center of the dispute is Citadel’s December 2 filing to the SEC. The document argues that many blockchain-based systems effectively bring together buyers and sellers in ways that resemble traditional exchanges. As such, Citadel says they should be regulated under the same standards, even if those systems operate through smart contracts rather than centralized infrastructure. Citadel warned that tokenized U.S. equities trading on DeFi platforms could create a “shadow equity market” outside the national market system, reducing regulatory oversight and fragmenting liquidity. The firm’s letter also rejects the idea that technology differences justify regulatory exemptions, insisting that “the same activity should face the same rules” regardless of whether it is powered by algorithms or legacy systems. DeFi advocates counter that this perspective ignores the design of decentralized protocols, which can function without centralized control and often rely on open-source contributions rather than corporate governance. Adams Pushes Back Against “Fair Access” Claims Adams criticized Citadel’s assertion that DeFi systems cannot provide “fair access,” calling the argument inconsistent with how traditional market makers operate. He argued that open-source protocols can lower barriers to participation, unlike centralized trading venues where access is limited by intermediaries. Developers and community members echoed this point, noting that the DeFi ecosystem encompasses a broad range of models, from fully permissionless exchanges to platforms that rely on more centralized components. Some community voices added that regulatory conversations often lack clarity because “DeFi” itself encompasses many different structures. Regulatory Pressure Builds as SEC Signals Broader Scrutiny The exchange comes at a time when the SEC has repeatedly taken enforcement action against DeFi teams. The agency has emphasized that it assesses economic realities rather than decentralization labels, citing past cases such as the Rari Capital settlement in 2024. If regulators adopt Citadel’s framing, entities involved in developing or maintaining DeFi protocols could face registration requirements designed for traditional broker-dealers. Industry participants warn that such a shift could make open-source projects difficult to operate, raising questions about the future of permissionless finance in the United States. As the debate continues, the clash highlights a deeper divide between emerging decentralized systems and established financial institutions, one that is increasingly shaping regulatory policy discussions in Washington. Cover image from ChatGPT, UNIUSD chart from Tradingview
