June 12, 2023
Dear Securities and Exchange Commission,
I, Tavonia Evans write to you as the founder of a startup, a minority-led initiative that seeks to launch a decentralized exchange (DEX). As an African-American woman, I represent a demographic that statistically has less access to capital than other startups. This, coupled with restrictive regulations, makes it nearly impossible for me to compete with well-funded initiatives.
My startup is unique in its focus on accessibility and education. The current landscape of Decentralized Finance (DeFi) has failed to adequately serve the people in these areas. This failure has resulted in disadvantaged Americans having less access to alternatives due to a lack of understanding, which in turn puts them at risk of venturing into unsafe territories.
The digital divide in the Black community is well-documented. According to a report by Global Citizen, 22% of African Americans have no internet at home. This lack of access to digital resources exacerbates the divide and hinders the ability of these communities to participate in the digital finance revolution.
The proposed rule, while well-intentioned, may inadvertently stifle innovation and competition, particularly for startups like mine that are working to bridge this digital divide. The \"Fair Access Rule\" is a commendable initiative, but it is important to consider how the rule is applied. While the rule aims to ensure fair access, it may inadvertently box out startups that are experienced in addressing lack of access and are working to rectify this issue.
The cost of compliance with the proposed rule could be prohibitive for startups. Registering with regulatory bodies, implementing robust security measures, and ensuring fair access could require significant resources. This cost of competitiveness could be damaging to my startup, thus negating the \"fair access\" that the rule seeks to promote.
Furthermore, it is important to note that not all DEXs trade crypto for fiat currencies. Some DEXs primarily deal with the exchange of crypto assets, including stablecoins. The proposed rule does not provide clear guidelines on how it applies to DEXs that do not facilitate crypto-to-fiat transactions. I urge the SEC to provide explicit guidance on this matter to ensure that these DEXs can operate within the regulatory framework.
I also urge the SEC to consider the unique role of stablecoins in the DeFi ecosystem. Stablecoins serve as a bridge between traditional fiat currencies and crypto assets, and they play a crucial role in facilitating transactions on DEXs. Clear guidelines on the treatment of stablecoins under the proposed rule would provide much-needed clarity for DEX operators.
I would like to add that the proposed amendment to the Exchange Act Rule 3b-16 should not include DEXs that do not provide access to assets considered securities. There should be a clear list of what is or is not a security. Until then, the Howey Test is the standard we can go by ( described in a legal opinion filed with us by listed token ). This lack of clarity can create uncertainty for startups like mine and hinder our ability to innovate and compete.
I urge the SEC to consider the unique challenges faced by startups, particularly those led by minority founders. We need more regulatory clarity and explicit guidance. A \"regulatory sandbox\" could provide a safe space for startups to test their platforms under supervised conditions. This would allow us to innovate and compete, while still ensuring investor protection and market integrity. I for one would gladly participate in a sandbox environment.
In conclusion, while the proposed rule seeks to promote fair access, it is important to consider its potential impact on startups, particularly those led by minority founders. I urge the SEC to consider these points and to provide more support for startups like mine that are working to bridge the digital divide and promote financial inclusion.
Thank you for considering my comments.
Sincerely,
Tavonia Evans
Founder, Guapcoin // Kowrii // GuapX