Oct. 30, 2023
Dear Securities and Exchange Commission, Thank you for the opportunity to provide public comment on the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the intention of enhancing investor protections and plugging gaps in the custody rule, I would like to express my concerns regarding the potential negative impact on decentralized finance (DeFi) and the lack of clarity surrounding digital assets or cryptocurrencies. Decentralized finance projects have been gaining momentum and have the potential to revolutionize traditional financial systems by leveraging blockchain technology. However, the proposed rules may inadvertently hinder the growth and development of Decentralized Finance, limiting innovation and potential financial inclusion. It is crucial that regulatory frameworks allow for the continued evolution and exploration of decentralized financial solutions. One of the key concerns regarding the proposed rules is the lack of clarity surrounding the definition of digital assets. As the digital asset ecosystem continues to evolve at a rapid pace, it is important for regulators to provide clear and unambiguous definitions to avoid confusion and ensure consistent regulatory practices. The inclusion of digital assets in the proposed rule necessitates a precise and comprehensive definition that accounts for the unique qualities and features of these assets. Furthermore, the proposed rules place burdensome record keeping and reporting requirements on investment advisors dealing with digital assets. While investor protection is paramount, it is crucial to strike a balance between regulation and innovation. Excessive regulatory burden could stifle innovation and deter investment advisors from engaging with digital assets, hindering the growth of this emerging sector. Another significant concern is the issue of privacy in relation to digital assets. Privacy is a fundamental right and should be taken into consideration when formulating regulatory frameworks. The proposed rules should address the importance of privacy in the context of digital assets, ensuring that appropriate safeguards are in place to protect personal information while still maintaining transparency and integrity in the financial system. In conclusion, I urge the Securities and Exchange Commission to carefully consider the potential negative impact on decentralized finance and the importance of providing clarity in the definition of digital assets. It is essential to strike a balance between investor protection and regulatory innovation, promoting an environment that fosters financial inclusion and technological advancement. Thank you for the opportunity to provide input on this important matter. Sincerely, Chris Thompson Sent with Proton Mail secure email.