TradFi, the old money on Wall Street, finally stops pretending.

In the past few years, they have been criticizing DeFi as the “Wild West,” while secretly researching blockchain technology. Now, the moment of truth has arrived — they admit that “tokenized US stocks” are the future, but with one precondition: this future must be led by them.

On December 4th, major US market maker Citadel Securities submitted a 13-page letter to the SEC, with a stance so firm it can be seen as a “declaration of war” against the existing DeFi model. Meanwhile, HSBC’s latest research report also echoed this sentiment, highlighting the ultimate direction of regulation.

The core subtext of these two documents is astonishingly consistent: blockchain technology is great, and we all want to use it; but the “decentralized” approach of DeFi must be “restructured.”

Citadel’s Overt Strategy

Who is Citadel? It is the largest market maker in US stocks, a giant controlling the trading lifeline of retail investors in America.

Why suddenly criticize DeFi? Because they are getting anxious.

With the rise of the concept of “tokenized US stocks,” if everyone starts trading Apple and Tesla stocks on-chain in the future, what will brokerages and market makers earn?

In its 13-page filing to the SEC, Citadel straightforwardly put forward three core points:

1. “Code is not a shield”: Whether it’s automated by smart contracts or manual matching, as long as you provide trading functionality, you are a “trading platform.”
2. “Reject privileges”: DeFi should not enjoy “innovation exemptions.” Whatever rules Citadel follows, decentralized exchanges like Uniswap must follow the same rules (KYC, anti-money laundering, registration as a broker).
3. “Technological neutrality”: We support blockchain technology but oppose “regulatory arbitrage.”

This move is very precise.

Citadel is well aware that if existing DeFi protocols are forced to register and conduct KYC like the NYSE, they will lose their core advantages of low cost and open access, thus facing a survival crisis.

All Talk, All Business

Don’t think Citadel is a “guardian” defending market fairness. If you peel back its investment map, you’ll find a fascinating scene of “double standards.”

On one hand, it publicly questions DeFi’s compliance; on the other hand, it heavily invests in crypto assets and companies that “embrace regulation”:

• Infrastructure investments: leading Ripple (valuation of $40 billion), heavy investment in Kraken ($20 billion valuation). It is betting wildly on top companies that welcome regulation.
• Asset acquisitions: even reportedly holding $600 million worth of Solana treasury shares (DFDV).
• Business grabbing: explicitly stating its intention to become a liquidity provider for Bitcoin.

Do you understand now?

Citadel is not trying to prevent the development of the crypto market; it’s trying to prevent an “uncontrolled” crypto market from developing.

Its attack on DeFi is essentially a cleanup — squeezing out “rough and tumble” DEXs that it sees as unregulated, and letting its “compliant army” take over the battlefield.

What it wants is not decentralization, but “regulated franchise rights.”

The “Defining Power” Battle

Why are TradFi (traditional finance) and DeFi (decentralized finance) clashing so intensely at this moment?

Because the “tokenized US stocks” cake is too big.

This is an opportunity to bring trillions of dollars’ worth of stock markets onto the blockchain. Whoever controls the definition of infrastructure will dominate the future of finance.

Crypto advocates argue:

Code is law, decentralization reduces costs, and regulation should adapt to technology.

Wall Street advocates argue:

Rules are rules, technology is just a tool, and blockchain must be integrated into the existing power structure.

In this game, HSBC’s latest report plays the role of “prophet,” pointing out the final form of Wall Street’s takeover of pricing power: permissioned and fully regulated.

HSBC believes that the SEC will never allow US stocks to circulate in an anonymous environment. The future on-chain US stocks will most likely run on a “consortium chain” controlled jointly by JPMorgan, HSBC, and Citadel.

This means that, although settlement will use blockchain, control over who can trade, who keeps the ledger, and who collects transaction fees might still be firmly in the hands of Wall Street giants.

Outside the Walls, the Wilderness Remains

HSBC states an honest truth in its report: “Despite differing stances, all parties agree that the market size of tokenization is expanding rapidly.”

The trend of “bringing US stocks on-chain” is inevitable, but this does not mean DeFi will come to an end. What we are more likely to see is the long-term coexistence of two orders:

One side is the “garden” fenced off by Wall Street,

Efficient, compliant, with strict entry barriers, providing a safe hunting ground for institutional whales.

The other side is the “wilderness” built by code,

Permissionless, freely growing, preserving the spark of innovation for all explorers.

Wall Street tries to tame code with rules, while code continues to iterate and explore new boundaries.

Perhaps the ultimate outcome is not a win-lose scenario, but a form of “divergent convergence” — when Wall Street’s capital flows on-chain, and DeFi’s infrastructure moves toward compliance, this “definition power” battle will ultimately reshape the financial world as we know it.