Oct. 28, 2023
Dear SEC, I would like to argue against the proposed SEC rules expanding the definition of "exchange" if they create unnecessary regulatory duplication or overlap with existing oversight frameworks such as: - Many crypto trading platforms are already regulated by other agencies like the CFTC, FinCEN, or state regulators. Subjecting them to overlapping SEC regulation could create confusion, legal uncertainty, and extra compliance costs. - Existing anti-money laundering, know-your-customer, and investor protection regulations applied by other regulators already cover many of the risks and concerns the SEC rules seek to address causing more redundant regulations. - Imposing a whole separate layer of SEC regulation risks regulatory arbitrage, where platforms domicile outside the US to avoid the duplication. This could hurt US innovation and competitiveness in crypto markets. - A better approach would be regulatory coordination and streamlining - having the SEC defer to existing regulation of crypto platforms overseen by other bodies like the CFTC. The SEC could fill gaps instead of duplicating oversight. - If any expanded SEC oversight is necessary, it should be limited in scope and tailored to avoid clashing with other regulators. A framework of mutual recognition based on existing robust AML, KYC, and investor protection rules could avoid duplication. - Cooperating on common standards and sharing oversight responsibilities with other regulators is preferable to a unilateral SEC expansion that risks overlap and confusion in crypto markets. Streamlining is better for innovation. In summary, while the SEC aims to protect investors are valid, those goals can be achieved while avoiding duplicative rules that add costs and legal uncertainty. Targeted gap-filling and coordination with fellow regulators is a better path. Thank you for your time on this matter of high importance. Sincerely, Diane Rose Sent with Proton Mail secure email.