Oct. 29, 2023
Dear Commissioners, I am writing to express my concerns and provide feedback on the Commission's approach towards the categorization and regulation of decentralized exchanges (DEXs) and other crypto platforms. 1.Nature of Decentralized Exchanges (DEXs): Decentralized exchanges differ fundamentally from traditional exchanges. DEXs primarily enable peer-to-peer exchanges, functioning without centralized oversight or custody. By equating DEXs with traditional exchanges, we risk misunderstanding this innovative technology's core essence. 2.Potential Stifling of Innovation: Traditional financial system-based regulations might hamper advancements in the crypto and blockchain domains. The distinctiveness of decentralized finance (DeFi) and other platforms should be nurtured, not stifled. 3.One-Size-Fits-All Approach: A blanket regulatory approach may fail to appreciate the nuanced differences between traditional stock exchanges and emerging decentralized platforms. We must ensure our regulations are tailored and flexible. 4.Uncertainty in Implementation: With the rapid progress of the crypto sector, there's a risk of our regulations becoming outdated, leading to compliance confusion and potential stifling of innovation. 5.Jurisdictional Issues: The global nature of crypto necessitates a more inclusive regulatory approach, rather than one solely focused on U.S. perspectives. 6.Unintended Consequences: We must be wary of potential downsides, such as reduced market liquidity and diminished price transparency, stemming from excessive regulation. 7.Barrier to Entry: Overregulation could set high entry barriers for new entrants, potentially curbing competition and letting only the big players dominate. 8.Loss of Competitive Edge: The U.S. risks losing its leadership position in the crypto sector if innovators look elsewhere due to stringent regulations. This would be detrimental to our nation's growth, economic opportunities, and global stature in the crypto and blockchain world. In conclusion, while investor protection and market integrity are paramount, it's equally vital to ensure the U.S. remains at the forefront of crypto innovation. I humbly urge the Commission to deliberate on these concerns and recalibrate its regulatory approach accordingly. Thank you for your consideration. Sincerely, Yuriy Zubyk