April 7, 2022
I am deeply concerned about the current proposal to expand the definitions of an \"exchange\" and \"alternative trading system\" (ATS). As currently stated, the definition is unacceptably broad, and it is unclear what new systems and protocols this is intended to apply to and regulate. The fact that the commission clarified specifically that this would not apply to chat platforms like Facebook and utility platforms like cell phones shows how alarmingly broadly this definition could be construed and applied.
It could thus be interpreted to include and apply to open-source software and protocols, including DeFi (decentralized finance) protocols, which are free code, software, and standards often developed and contributed to by many independent individuals and volunteers across the world in their individual capacity, and which are publicly available to anyone in the world to use freely and directly \"as-is\", without warranty or intermediary service of any kind. It would thus be impossible for such a developer or contributor to fulfill the supervisory responsibilities for trading activity that the SEC requires of an exchange, as they have no control over who, when, where, and how people choose to use the protocol, or who continues to develop, maintain, or alter the protocol.
Please consider the uncertainty and chilling effect this would have on open-source blockchain, protocol, and web3 developers in the U.S. today who are driving this innovative new industry, and who continue to develop open-source software, tools, and public goods that our digital world relies upon today. Consider how this will affect technology innovation in the U.S. and U.S. competitiveness going forward
In light of this, I urge the SEC to amend and update this proposal to clarify the definitions of an \"exchange\" and \"alternative trading system\" (ATS), and to clarify what specific types of systems and protocols this is intended to apply to.