Subject: File Number S7-02-22 - Comment on Proposed Amendments to the Definition of "Exchange" under Exchange Act Rule 3b-16
From: Ian Cannon
Affiliation:

Apr. 17, 2023

April 17, 2023 

Securities and Exchange Commission 
100 F Street NE 
Washington, DC 20549 

Dear Commissioners, 

I am writing in response to the reopening of the comment period and the request for public input on the proposed amendments to the definition of "exchange" under Exchange Act Rule 3b-16, as it pertains to platforms that trade crypto assets securities, including decentralized finance (DeFi) systems. 

Firstly, I appreciate the Commission's efforts in updating the existing rules to keep pace with the rapidly evolving financial landscape, especially in the realm of cryptocurrency and DeFi. The proposed amendments seek to establish a level playing field and strengthen investor protection by subjecting platforms trading crypto asset securities to the same regulatory framework as traditional securities exchanges. 

I support the inclusion of DeFi platforms within the scope of the amended exchange definition, as it recognizes the growing significance of DeFi in the financial ecosystem and the need for appropriate regulation to mitigate potential risks to investors. As these platforms continue to grow and attract a more extensive user base, it becomes essential for regulators to oversee their activities and ensure the transparency, fairness, and security of their operations. 

However, I want to emphasize the importance of balancing regulation and innovation. Overly restrictive rules may stifle the growth of DeFi platforms, which have the potential to democratize finance and create new opportunities for underserved communities. I urge the Commission to consider the unique characteristics of DeFi systems, such as decentralization and automated smart contract execution while formulating the final amendments to the definition of "exchange." 

Additionally, I believe the Commission must conduct ongoing dialogues with industry stakeholders, including DeFi platform operators, developers, and investors, to understand their concerns better and tailor the regulatory framework accordingly. This will help create an environment that promotes both innovation and investor protection. 

In conclusion, I favor the proposed amendments to the definition of "exchange" under Exchange Act Rule 3b-16, with particular attention to including DeFi platforms. However, I urge the Commission to balance regulation and innovation and engage in an open dialogue with industry stakeholders to create a regulatory framework that serves the best interests of investors and the DeFi community. 

Thank you for considering my comments. 

Sincerely, 

Ian Cannon