Dear Securities and Exchange Commission, I am writing to provide my comments on the proposed rule "Safeguarding Advisory Client Assets" (File Number: S7–04–23) regarding the safeguarding of client assets by investment advisers. While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have concerns about potential negative impacts on peer-to-peer exchanges and the insufficient limitation of reporting requirements for protocols run outside the US and for users outside the US. First and foremost, the proposed rules may hinder the growth and development of peer-to-peer exchanges, which have emerged as a vital tool for decentralized finance (DeFi) systems. These platforms operate on a peer-to-peer basis, allowing users to transact directly with each other without intermediaries. By imposing regulatory requirements similar to those imposed on centralized exchanges, such as a broker's license, the proposed rules limit user autonomy and financial sovereignty. These requirements divert resources from innovation and subject users to burdensome and unnecessary restrictions. Moreover, the proposed regulations do not sufficiently limit reporting requirements for protocols run outside the US and for users outside the US. Given the global nature of DeFi protocols and their user base, it is essential to strike a balance between regulatory oversight and avoiding unnecessary barriers that stifle innovation. The expansive reporting requirements could lead to increased compliance costs, which may discourage participation by both protocol developers and users. This could result in reduced access to decentralized financial services and hinder the competitiveness of US-based DeFi projects on a global scale. It is important for the SEC to consider the unique nature of DeFi and peer-to-peer exchanges while developing regulations. While investor protection is laudable, it must not come at the cost of stifling innovation and hindering the growth of a decentralized financial ecosystem that has the potential to democratize financial access globally. In light of these concerns, I urge the SEC to consider implementing regulatory frameworks that are tailored specifically to the DeFi space. This may involve establishing regulatory sandboxes or innovation hubs where DeFi projects can test their technologies within certain parameters, allowing for a controlled approach to addressing potential risks. Additionally, the SEC should collaborate with international regulatory counterparts to ensure consistent standards and avoid conflicts between jurisdictions. This will foster an ecosystem that promotes innovation, while maintaining reasonable investor protections and guarding against financial crimes. In conclusion, while I support the SEC's goal of enhancing investor protections, it is crucial to strike a balance that fosters innovation and global competitiveness in the DeFi space. I encourage the SEC to review and revise the proposed rules to address the potential negative impacts on peer-to-peer exchanges and the concerns of users outside the US. Thank you for considering my comments. I would be happy to clarify any points or provide additional information if needed. Sincerely, Jay Thomsen