Jun. 13, 2023
Dear Securities and Exchange Commission, I am writing this letter to express my strong opposition to the recently proposed rule making for decentralized finance (DeFi) platforms, as outlined in the Coindesk article published on June 12, 2023, titled "SEC's DeFi Rulemaking Do-Over Falls Short." As an active participant in the cryptocurrency and decentralized finance space, I firmly believe that the proposed regulatory framework would stifle innovation, impede growth, and limit the potential of this transformative technology. While I understand the SEC's mission to protect investors and maintain market integrity, the current proposal fails to strike the right balance between regulation and fostering innovation. First and foremost, it is essential to recognize the fundamental characteristics of DeFi platforms. Unlike traditional financial intermediaries, DeFi operates on decentralized networks, where smart contracts govern the rules and transactions. By nature, DeFi platforms empower individuals to engage in financial activities without relying on centralized authorities or intermediaries. This decentralized model not only enables greater accessibility but also reduces counterparty risk and enhances transparency. The proposed rule making, as described in the aforementioned article, suggests subjecting DeFi platforms to the same regulatory requirements as traditional centralized exchanges. This approach disregards the unique attributes and technical intricacies of DeFi, imposing a one-size-fits-all framework that may not be suitable or effective for this rapidly evolving sector. Furthermore, DeFi platforms thrive on innovation, and a heavy-handed regulatory approach risks stifling the creativity that has driven the remarkable growth of this ecosystem. It is important to foster an environment that encourages experimentation, as it is through trial and error that breakthroughs and advancements are achieved. A more collaborative approach, involving open dialogue and engagement with industry participants, would better serve the goal of protecting investors while allowing for continued innovation. Moreover, imposing burdensome regulatory compliance requirements on decentralized applications (dApps) and their developers may lead to unintended consequences. Many developers in the DeFi space are individuals or small teams who may not have the resources to navigate complex regulatory frameworks. This could result in a chilling effect on innovation and drive talent away from the United States, hampering its ability to remain at the forefront of technological advancement. Instead of stifling the potential of DeFi, the Securities and Exchange Commission should focus on nurturing an environment that encourages responsible innovation, educates investors about the associated risks, and collaborates with industry experts to develop guidelines and best practices. By doing so, the SEC can effectively protect investors while allowing for the continued growth and development of this promising technology. In conclusion, I urge the Securities and Exchange Commission to reconsider the proposed rule making for DeFi platforms and engage in a more inclusive and collaborative approach to regulation. It is crucial to strike a balance that safeguards investors' interests while fostering innovation and maintaining the United States' competitiveness in the global financial landscape. Thank you for considering my perspective on this matter. I trust that you will carefully evaluate the concerns raised by individuals like myself who are deeply invested in the success and potential of decentralized finance. Yours sincerely, Spencer Janssen