Oct. 17, 2023
The following summarizes potential issues for crypto users related to the Subject File Number: There appears to be a lack of understanding on what a crypto "exchange" actually is, and how it works. The defi exchanges only exchange one token for another. This simple transaction has never had a cost associated with it and is one of the innovations in crypto currency. It is completely different from a Centralized Crypto Exchange (CEX). There is a risk that the proposed rule changes may favor larger financial institutions over smaller players and startups in the decentralized finance space. This could stifle innovation. By amending definitions like "broker" the rules may impose regulatory burdens on decentralized protocols and applications that were previously unregulated. This could increase costs and overhead. The rules aim to impose Anti-Money Laundering requirements on DeFi, which could improve security but also invites surveillance and loss of transactional privacy. The broadened scope of the rules could lead to unintended consequences and over-regulation if not carefully tailored to the unique nature of decentralized finance. In summary, while regulation appears to try to protect consumers, the lack of understanding of what a defi exchange actually is could excessive burden crypto users for no reason. In addition, overly broad rules could increase costs, stifle innovation, and eliminate some of the anonymity benefits of DeFi. Sincerely, Anonymous Concerned American