Subject: S7-02-22: Webform Comments from John Ratcliffe
From: John Ratcliffe
Affiliation:

Oct. 28, 2023

The Securities and Exchange Commission (SEC) and the
Commodity Futures Trading Commission (CFTC) have been in a conflict
over who has jurisdiction over digital assets. The SEC claims that
digital assets are securities, while the CFTC claims that they are
commodities. This lack of regulatory clarity has been a major barrier
to the growth and adoption of digital assets.

If the proposed SEC rule on ATSs were to apply to digital assets
before the CFTC-SEC conflict is resolved, it could have a number of
negative consequences. First, it could create uncertainty and
confusion for market participants. It would be unclear which
agency's rules apply to digital assets, and companies could face
conflicting requirements. This could discourage investment and
innovation in the digital asset space.

Second, applying the SEC's proposed rule to digital assets before
the CFTC-SEC conflict is resolved could give the SEC too much power
over the market. The SEC is a securities regulator, and its rules are
designed to protect investors in traditional securities markets.
Digital assets are a new and different asset class, and the SEC's
rules may not be well-suited to them. Applying the SEC's rules to
digital assets could lead to overregulation and stifle innovation.

Third, applying the SEC's proposed rule to digital assets before
the CFTC-SEC conflict is resolved could harm investors. The SEC's
rules are complex and expensive to comply with. Small businesses and
startups may not be able to afford to comply with the SEC's
rules, which could force them out of the market. This would reduce
competition and innovation in the digital asset space.

For all of these reasons, the SEC's proposed rule on ATSs should
not apply to digital assets until the CFTC-SEC conflict is resolved.

Specifically, here are some arguments how the proposed SEC rule on
ATSs could harm investors in the digital asset space:

The proposed rule could lead to increased costs and compliance burdens
for ATSs that trade digital assets. This could force some ATSs to exit
the market, reducing competition and choice for investors.
The proposed rule could give the SEC too much power over the digital
asset market. This is concerning because the SEC has a history of
being hostile to digital assets and innovation.
The proposed rule could lead to overregulation of the digital asset
market. This could stifle innovation and make it more difficult for
new entrants to compete.
Overall, the potential risks of applying the SEC's proposed rule
on ATSs to digital assets before the CFTC-SEC conflict is resolved
outweigh the potential benefits.