Oct. 14, 2023
F V <[REDACTED]> 07:39 (10 minutes ago) to rule-comments To whom it may concern, As a concerned citizen and advocate for the cryptocurrency and digital asset community, I strongly oppose the proposal "Safeguarding Advisory Client Assets; Reopening of Comment Period" by the Securities and Exchange Commission (SEC). While I understand the importance of investor protections, I believe that the SEC is overreaching in its regulation of cryptocurrency and digital assets, which could stifle innovation and hinder the growth of this emerging industry. Firstly, it is crucial to recognize that cryptocurrencies and digital assets operate in a unique and decentralized manner. They are not subject to the same traditional custodial arrangements as traditional financial assets. The proposed rule, which aims to apply the existing custody rule to digital assets, fails to acknowledge this fundamental difference. By attempting to fit cryptocurrencies into a regulatory framework designed for traditional assets, the SEC risks stifling innovation and hindering the development of this transformative technology. Furthermore, it is important to note that existing laws already provide a framework for regulating cryptocurrencies and digital assets. The SEC's jurisdiction should be limited to cases where securities laws are violated, rather than imposing broad regulations on the entire industry. The Howey Test, established by the Supreme Court, provides a clear definition of what constitutes a security. Applying this test to cryptocurrencies would ensure that only those assets that meet the criteria of a security are subject to SEC regulation, while allowing other digital assets to operate within a more flexible regulatory environment. Additionally, the SEC's proposed rule fails to consider the potential negative impact on small businesses and startups in the cryptocurrency and digital asset space. These companies often rely on innovative business models and decentralized networks to operate. Imposing burdensome regulatory requirements could create significant barriers to entry and hinder the ability of these businesses to compete and thrive in the market. It is essential for regulators to foster an environment that encourages innovation and entrepreneurship, rather than stifling it with excessive regulations. Moreover, the SEC's approach to regulating cryptocurrencies and digital assets should prioritize investor education and awareness, rather than imposing strict rules and restrictions. The cryptocurrency market is highly volatile and carries inherent risks. Instead of attempting to regulate every aspect of this market, the SEC should focus on educating investors about the potential risks and encouraging responsible investment practices. This approach would empower investors to make informed decisions and protect themselves against fraudulent activities, without stifling the growth and development of the industry. In conclusion, while investor protection is important, the SEC's proposed rule "Safeguarding Advisory Client Assets; Reopening of Comment Period" represents an overreach in its regulation of cryptocurrency and digital assets. The SEC's attempt to apply traditional custodial rules to this unique and decentralized industry fails to recognize the fundamental differences and risks stifling innovation. Existing laws, such as the Howey Test, already provide a framework for regulating securities in the cryptocurrency space. Imposing broad regulations on the entire industry would hinder the growth of small businesses and startups and create barriers to entry. Instead, the SEC should prioritize investor education and awareness to empower individuals to make informed decisions. It is crucial to foster an environment that encourages innovation and entrepreneurship while ensuring investor protection. Yours faithfully, Anthony Beaumont