Oct. 26, 2023
To Whom It May Concern, I write to express my concerns regarding the SEC's proposal to broaden the definition of an "exchange." While I appreciate the Commission's dedication to protecting investors and fostering market integrity, I firmly believe that this proposal may not be in the best interest of U.S. investors for the following reasons: Ambiguity in Definition: The proposed definition for an "exchange" is overly expansive and lacks specificity. Such vagueness can lead to uncertainty among market participants, making it challenging for them to discern which activities and entities are regulated, ultimately complicating compliance. Inhibition of Innovation: The U.S. is currently experiencing a decline in its competitive edge in the digital asset sector. The proposal, with its increased compliance costs and uncertainties, risks exacerbating this situation. As we've seen, many innovators and investors are already seeking friendlier jurisdictions overseas, depriving U.S. investors of cutting-edge opportunities. Regulatory Overreach: The application of this proposal to decentralized finance (DeFi) protocols and smart contracts appears to stretch beyond the SEC's traditional regulatory scope. It's crucial to recognize that these technologies, underpinned by code, operate autonomously, eliminating the need for intermediaries. As such, subjecting them to regulations crafted for traditional exchanges seems inappropriate. Implications for Open-source Developers: By potentially placing obligations on developers who merely write or share information about platforms they don’t control, we risk undermining the very spirit of open-source development. This can severely limit the growth and distribution of decentralized technologies, narrowing options for investors. Potential Risk Aversion: The proposal may inadvertently paint certain technological advancements as high-risk ventures due to the uncertainties and compliance costs attached. Such a perception can deter investments, slowing down the evolution of the digital asset landscape. In conclusion, while regulatory clarity is essential, it's equally vital to ensure that the U.S. remains at the forefront of financial innovation. I urge the Commission to reconsider the proposal in light of its potential repercussions on the U.S. crypto and digital asset landscape. Your efforts are invaluable, and I hope they align with the long-term interests of U.S. investors and innovators. Thank you for considering my perspective.