Citadel has formally requested that the U.S. Securities and Exchange Commission (SEC) regulate decentralized finance (DeFi) protocols under the same framework as traditional exchanges. The market maker argues that current DeFi operations often mirror the functions of securities exchanges and thus require similar oversight to ensure market integrity and investor protection. The proposal specifically calls for DeFi platforms to register as exchanges, which would subject them to strict compliance standards, including reporting requirements and surveillance obligations. This move by a major traditional finance player highlights the growing tension between institutional market participants and the decentralized ethos of the crypto sector. Industry observers note that this push aligns with Citadel's broader strategy to integrate crypto into regulated markets, potentially creating barriers for smaller, decentralized competitors. The request has sparked immediate backlash from crypto-native communities who argue that applying traditional exchange rules to immutable smart contracts is technically unfeasible and would stifle innovation.