Oct. 15, 2023
Dear Securities and Exchange Commission , I am writing to express my deep concern regarding the broad scope of the new proposed rule by the Securities and Exchange Commission (SEC) and the potential implications it may have on the usage of smart contracts. While it is crucial to regulate digital asset markets and ensure investor protection, it is equally essential to maintain a balance that does not stifle innovation and individual freedoms in the digital space. The proposed rule raises the alarming possibility that every person using a smart contract could be viewed as an exchange, potentially subjecting individuals and entities to onerous regulatory obligations. This interpretation, in my opinion, is overly broad and could have detrimental consequences. Here are some key points to consider: Innovation: Smart contracts are a cornerstone of innovation in blockchain technology, enabling automated, trustless agreements without intermediaries. They have the potential to revolutionize a wide array of industries, including finance, supply chain, and more. A broad interpretation of the rule could hinder the growth of these technologies. Individual Freedom: If every person using a smart contract is viewed as an exchange, it could place undue restrictions on individuals who simply wish to engage in peer-to-peer transactions or utilize smart contracts for various purposes without the intention of running an exchange. Compliance Burden: Expanding the scope of the rule to cover every smart contract user could lead to a disproportionate compliance burden. Compliance costs, especially for individuals, may become prohibitively high, potentially discouraging participation in the digital asset ecosystem. Complexity and Ambiguity: Defining every smart contract user as an exchange introduces complexity and ambiguity into the regulatory framework. It may create confusion, making it challenging for individuals to understand their obligations under the rule. Enforcement Challenges: Regulators would face significant challenges in monitoring and enforcing a rule with such a broad scope. This could divert resources from more pressing regulatory priorities and potentially lead to inefficient allocation of regulatory efforts. Inhibiting Growth: Overly broad regulations could hinder the growth of decentralized finance (DeFi) and blockchain projects. Developers and entrepreneurs may be discouraged from creating new, innovative applications due to the fear of regulatory repercussions. In conclusion, while I support the SEC's goal of ensuring market integrity and investor protection, I urge you to reconsider the broad scope of the proposed rule concerning smart contracts. It is vital to strike a balance that encourages innovation and fosters a thriving digital asset ecosystem while protecting the interests of investors and participants. I believe that a more targeted approach, focusing on entities and systems that genuinely act as exchanges, would better serve these goals. Thank you for your attention to this matter. I trust that you will carefully consider the potential consequences of an overly broad rule and work to ensure that innovation and individual freedom are not unduly hindered. Sincerely, Anders Braathen