Comment for General CFTC Request Input on All Recommendations for the CFTC in the President's Working Group on Digital Asset

Comment Text:

Dear Commissioners,
I appreciate the opportunity to provide feedback on the CFTC’s Crypto Sprint initiative. As a participant in the digital asset market, I support the Commission’s efforts to establish a clearer, safer, and more transparent regulatory framework for digital assets.
In this letter, I would like to highlight three key areas where regulatory clarity and oversight would bring significant benefits to market participants and investors alike:
1. Retail Investor Protection and Leverage Limits
Retail investors, particularly those without specialized blockchain or trading knowledge, face outsized risks in markets. Current “knowledge questionnaires” used by CEXs are often perfunctory, with limited ability to assess a user’s financial literacy or risk tolerance.
I respectfully propose that:
Stricter leverage limits be imposed on retail investors.
Exchanges be required to implement robust risk-assessment questionnaires that more accurately gauge investor knowledge before granting access to leveraged products.
Exchanges disclose liquidation risks clearly and prominently to ensure retail investors fully understand potential outcomes.
Such measures would reduce systemic retail losses and improve long-term confidence in regulated U.S. markets.

2. Stronger Oversight of Market Makers
Market makers play a critical role in providing liquidity, however, it is not new that unregistered market maker are playing schemes. The blending of rat trading with exchange operations has, in past cases, created conflicts of interest.
To safeguard fair and transparent markets, I recommend that the CFTC:
Impose clear separation between exchanges and affiliated market-making entities.
Market Makers has to be officially registered under national or state governing.
Mandate disclosure of market-making arrangements, including fee structures and incentive programs.
Such oversight would enhance price integrity and reduce the risk of manipulation.

3. Clarity on Commodity vs. Security Classification
The ongoing ambiguity between commodity and security classification for digital assets has created significant legal uncertainty. The litigation surrounding XRP is a prime example of how unclear regulatory definitions can harm investors and stifle innovation.
To address this, I encourage the CFTC to:
Collaborate with the SEC to create a joint framework that classifies at least the top 100–200 traded tokens on major exchanges.
Publish and maintain a publicly accessible registry of digital assets, indicating their commodity or security status.
Provide a process for ongoing review, as token use cases and networks evolve over time.
This would prevent future disputes, enhance investor protection, and foster a more predictable regulatory environment.

Conclusion
By implementing stronger retail safeguards, enhancing market maker oversight, and clarifying asset classifications, the CFTC can strike a balance between protecting investors and supporting innovation. I commend the Commission’s commitment to advancing regulatory clarity in digital asset markets and welcome further opportunities to contribute to this dialogue.
Thank you for considering these recommendations.
Respectfully submitted,
Airis Lu