Citadel vs. DeFi: SEC Letters Reveal Crypto Regulation Battle Over Market Structure

A heated regulatory debate is unfolding between traditional finance giant Citadel Securities and the decentralized finance (DeFi) sector, as revealed in recent correspondence with the U.S. Securities and Exchange Commission (SEC). The core dispute centers on the proposed "Order Competition Rule." Citadel Securities, a dominant market maker, supports the rule, arguing it would enhance transparency and fairness for retail investors by increasing order-by-order competition. In contrast, DeFi advocates, including the DeFi Education Fund, vehemently oppose it. They contend the rule is designed for a centralized market structure and would be technologically impossible to implement on decentralized blockchains like Ethereum (ETH), potentially stifling innovation. This clash highlights the fundamental tension between existing financial regulations and the novel architecture of DeFi protocols, setting the stage for a pivotal SEC decision that could shape the future landscape of crypto and traditional market integration.