Apr. 23, 2023
April 23, 2023 Subject: Concerns Regarding Proposed Rule 34-97309 and Its Impact on the US Cryptocurrency Industry Dear Gary Gensler, I hope this message finds you well. I am writing to express my concerns about the SEC's proposed rule, found here: https://www.sec.gov/rules/proposed/2023/34-97309.pdf, and its potential negative implications on the US cryptocurrency industry, particularly in relation to decentralized finance (DeFi) exchanges. I would like to respectfully request that the SEC reconsider the proposed rule, bearing in mind the potential consequences for growth and innovation within the US cryptocurrency ecosystem. Upon analyzing the proposed rule, it becomes apparent that it may act as a de facto ban on legal DeFi use in the United States. The provisions contained within the rule, such as mandatory Know Your Customer (KYC) requirements on all self-hosted wallet transactions, could effectively render DeFi exchanges nonviable for operation. This is particularly concerning given that DeFi has been a significant driver of growth and innovation in the cryptocurrency space. In contrast, the recent European Union (EU) regulations strike a more balanced approach, focusing on investor protection and fraud prevention without resorting to the onerous amendments found in the SEC's proposed rule. The EU's framework allows for the responsible growth of the cryptocurrency industry without stifling innovation. As a long-time participant in the cryptocurrency industry, I have experienced firsthand the transformative potential of this technology. However, the current regulatory environment and the proposed rule could hinder the development of the industry within the United States, driving innovation and investment to other jurisdictions. During the recent hearings concerning the cryptocurrency space, concerns have been raised that innovation in the industry is already moving to countries like China. While it is essential to ensure that the industry operates within a secure and regulated environment, it is also important to strike a balance that enables growth, innovation, and the continued development of this transformative technology. I respectfully encourage the SEC to consider alternative approaches to regulation, such as adopting aspects of the EU's recent laws, which foster a more conducive environment for the cryptocurrency industry. Commissioner Hester Peirce has offered valuable insights on striking a balance between regulation and innovation, and her perspective may provide useful guidance for the SEC in this matter. In conclusion, I strongly recommend that the SEC reconsider the proposed rule and its potential consequences for the US cryptocurrency industry. By adopting a more balanced approach, the SEC can encourage growth and innovation within the United States while still ensuring investor protection and fraud prevention. Thank you for your time and consideration. I appreciate your attention to this important matter and your dedication to fostering a vibrant and secure financial ecosystem in the United States. Sincerely, Keith Vidal