Apr. 21, 2023
April 21, 2023 Dear SEC, I am writing to express my concern about the proposal to adjust the definition of an exchange and the associated required disclosures. As a United States Citizen, taxpayer, businessman, and registered voter, I would like to highlight that this proposal may not be directly applicable to decentralized finance (DeFi) platforms or smart contracts that have eliminated the risks associated with intermediaries. The decentralized nature of DeFi platforms and the autonomous functioning of smart contracts make them significantly different from traditional exchanges in ways that protect willing participants. The rules and regulations enforced by the Securities and Exchange Commission are designed to protect investors in traditional financial markets, where intermediaries play a critical role in ensuring compliance and protecting investors from fraud and manipulation. However, the use of smart contracts to automate transactions in DeFi eliminates intermediaries and allows users to transact directly with each other. This reduces the complexity of traditional financial services, as well as the need for trust in intermediaries. It also makes it challenging to apply traditional regulatory frameworks to DeFi. Therefore, I suggest that the SEC consider exploring new definitions and disclosures that are better suited to the unique characteristics of DeFi. It is important to avoid constricting the growth and innovation of United States DeFi by imposing unnecessary or impossible tasks to unintermediated transactions via code. Thank you for your attention to this matter. Sincerely, Cody Abel