Blockchain Association Pushes Back Against Citadel's DeFi Regulation Proposal

The Blockchain Association has weighed in on the ongoing debate surrounding decentralized finance (DeFi) regulation in the United States. In a recent letter submitted to the Securities and Exchange Commission (SEC), the association expressed opposition to Citadel's proposal for strengthened DeFi regulation.

The Blockchain Association argues that DeFi protocol developers do not fit within the traditional definition of brokers or exchange operators, which would subject them to the same regulatory framework as these intermediaries. Instead, the organization is advocating for an 'innovation exemption' mechanism that would provide a pilot regulatory space for on-chain assets and tokenized securities.

The association suggests that implementing such a framework would not only promote innovation but also help to retain technological advancements within the US. According to the Blockchain Association, a comprehensive rulemaking process can take a long time, which could delay adoption and drive innovation overseas.