Jun. 13, 2023
June 13, 2023 Subject: Concerns Regarding the Expansion of the Definition of "Exchange" to Include Decentralized Digital Asset Exchanges Dear Sir/Madam, I am writing to express my vehement objections to the proposed amendment of the definition of "exchange" under Exchange Act Rule 3b-16 by the U.S. Securities and Exchange Commission (SEC). As a stakeholder in the digital asset space, I am particularly concerned with the implications of extending this definition to include decentralized digital asset exchanges. My objections are based on three primary concerns: regulatory overreach, the misapplication of definitions, and the potential infringement on free speech. Firstly, the inclusion of decentralized digital asset exchanges within the scope of Rule 3b-16 is a clear case of regulatory overreach. Decentralized exchanges are fundamentally different from traditional securities exchanges, operating on principles of openness, transparency, and peer-to-peer interaction. Imposing traditional securities regulation on such platforms is not only inappropriate but also fails to acknowledge the unique characteristics and challenges of the digital asset space. Secondly, expanding the definition of "exchange" in this manner amounts to a misapplication of definitions. The term "exchange" as currently defined pertains to a specific type of financial institution with a clear role and responsibilities. Applying this term to decentralized digital asset exchanges could lead to confusion and misinterpretation, undermining the intent and effectiveness of Rule 3b-16. Thirdly, and perhaps most importantly, the proposed changes raise serious concerns about the infringement of free speech. The creation and operation of decentralized digital asset exchanges often involve the writing and publishing of open-source codea form of expressive activity protected by the First Amendment. Regulating these platforms as if they were traditional exchanges could potentially violate the free speech rights of developers and users. In light of these concerns, I urge the SEC to reconsider its approach towards the regulation of decentralized digital asset exchanges. A more nuanced understanding of the digital asset space is needed to create regulatory frameworks that protect investors without stifling innovation or infringing on constitutional rights. Thank you for considering my views on this critical issue. Sincerely, David Rockwell