Attention: Ms. Vanessa A. Countryman Secretary Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-1090 And to whom else it may concern. This is a Request for Re-Proposal regarding File Number S7-04-23, Safeguarding Advisory Client Assets. This rule might also be known as SEC Release No. IA-6240. You have some critical misconceptions that invalidate much what your rule is proposing. The APA states that you must consider all relevant comments. It doesn't look good for the SEC when the courts have to roll back mistakes the SEC has made. The only way to protect Americans from foreign hackers is for sites to not capture their name, phone, address, or any other data about them. The NSA and NIST work hard to try and keep Americans safe from foreign hackers. If an agency were to mandate that sites capture, host, or disseminate Americans private information, it would be directly undoing the hard work the NSA and NIST do to protect them. Millions upon millions of Americans have been directly harmed by data breeches, if you want to hurt more Americans, just mandate that more central repositories of their data be created. Here's a real specific example. Kroll was hired to handle communications with creditors of some bankrupt, government licensed, corporate entities. They or those they worked with got hacked multiple times and now the users the government is supposed to protect are getting phished and sim swapped. Why? Because centralization hurts Americans. The same centralization that harmed everyone through going bankrupt is quite the similar centralization which is now getting everyone victimized through abusing their leaked phone numbers, email addresses, names, and perhaps even balances. Decentralized systems are the best way to reduce the harm of data breeches. Period. There's no central repository to crack into. Laws should be made to amplify the power of decentralized systems to protect Americans. Please stop trying to undo the hard work that the NSA and NIST are doing. You do not custody coins, the blockchain does. You do not send coins. You publish updates to a public database. The coins are right where they always were. You do not have a cryptocurrency wallet, you have a keychain. Every addresses was created and published by individuals through their own labor. Every update was created and published by individuals through their own labor. There aren't really any coins, just numbers people have a penchant for. Like characters in literature. If the value was in your wallet, the value would double when you copied your wallet. It doesn't. If the value was in the blockchain, the value would double when the blockchain was copied. It doesn't. The value is a shared fiction, subjective and volatile, subject to whim and fancy, yet worth $ billions. You don't use the blockchain, you run it, it's software. In the blockchain, you're not a user, you're a publisher. Blockchain software is publishing software. Speech is speech. Code is speech. The blockchain is both speech and publishing software, and as such, should be doubly protected; Like you would protect books and the pen. Attempting to regulate what you think is "custody" is actually regulating 1st amendment protected speech. This is data. This is speech. Are you allowed to copy free and open source public software? Yes. Are you allowed to publish whatever data you like in your free and open source public software copy? Yes. Are people allowed to run the free and open source public software? Yes. Are people allowed to run the free and open source public software to communicate with each other? Yes. Are people allowed to run the free and open source public software to publish data? Yes. Are people allowed to see value in the data people published in the free and open source public database? Yes. Welcome to the Blockchain. This is as protected free speech as free speech gets. Blockchains are a library. Blocks are peoples writing, math, art, speech. Blockchain software is the publishing software you use to publish the speech you've created to the public. The first amendment protects your right to communicate with your fellow man. Banning the pen would be worse than banning a book. Blockchains are the digital pen by which you make permanent, immutable, provable speech to the world. They are a unique tool by which you can prove that you said something at a certain time. A tool which lets you communicate with your fellow man permissionlessly, as god intended. A building block for the digital future of man. The constitution has been proven in court to protect numerous types of speech from dance, to nudity, to code. Blockchains are more than just speech, they're also the very tools by which you can broadcast your ideas into the world. Often a Turing complete vast world of possibility. Here's some citations proving the idea. Junger v. Daley, 209 F.3d 481 (6th Cir. 2000) Appellate court opinion that encryption code is protected by the First Amendment. The court: "The Supreme Court has explained that “all ideas having even the slightest redeeming social importance,” including those concerning “the advancement of truth, science, morality, and arts” have the full protection of the First Amendment. Roth v. United States, 354 U.S. 476, 484, 77 S.Ct. 1304, 1 L.Ed.2d 1498 (1957) (quoting 1 Journals of the Continental Congress 108 (1774)). This protection is not reserved for purely expressive communication. The Supreme Court has recognized First Amendment protection for symbolic conduct, such as draft-card burning, that has both functional and expressive features. See United States v. O'Brien, 391 U.S. 367, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968). The Supreme Court has expressed the versatile scope of the First Amendment by labeling as “unquestionably shielded” the artwork of Jackson Pollack, the music of Arnold Schoenberg, or the Jabberwocky verse of Lewis Carroll. Hurley v. Irish-American Gay, Lesbian and Bisexual Group, 515 U.S. 557, 569, 115 S.Ct. 2338, 132 L.Ed.2d 487 (1995). Though unquestionably expressive, these things identified by the Court are not traditional speech. Particularly, a musical score cannot be read by the majority of the public but can be used as a means of communication among musicians. Likewise, computer source code, though unintelligible to many, is the preferred method of communication among computer programmers. Because computer source code is an expressive means for the exchange of information and ideas about computer programming, we hold that it is protected by the First Amendment. The functional capabilities of source code, and particularly those of encryption source code, should be considered when analyzing the governmental interest in regulating the exchange of this form of speech. Under intermediate scrutiny, the regulation of speech is valid, in part, if “it furthers an important or substantial governmental interest.” O'Brien, 391 U.S. at 377, 88 S.Ct. 1673. In Turner Broadcasting System v. FCC, 512 U.S. 622, 664, 114 S.Ct. 2445, 129 L.Ed.2d 497 (1994), the Supreme Court noted that although an asserted governmental interest may be important, when the government defends restrictions on speech “it must do more than simply ‘posit the existence of the disease sought to be cured.’ ” Id. (quoting Quincy Cable TV, Inc. v. FCC, 768 F.2d 1434, 1455 (D.C.Cir.1985)). The government “must demonstrate that the recited harms are real, not merely conjectural, and that the regulation will in fact alleviate these harms in a direct and material way.” Id. We recognize that national security interests can outweigh the interests of protected speech and require the regulation of speech. In the present case, the record does not resolve whether the exercise of presidential power in furtherance of national security interests should overrule the interests in allowing the free exchange of encryption source code." And Bernstein v. DOJ (1999) Privacy enabling technology is protected by the First Amendment. Quoting the Court: "Second, we note that the government's efforts to regulate and control the spread of knowledge relating to encryption may implicate more than the First Amendment rights of cryptographers. In this increasingly electronic age, we are all required in our everyday lives to rely on modern technology to communicate with one another. This reliance on electronic communication, however, has brought with it a dramatic diminution in our ability to communicate privately. Cellular phones are subject to monitoring, email is easily intercepted, and transactions over the internet are often less than secure. Something as commonplace as furnishing our credit card number, social security number, or bank account number puts each of us at risk. Moreover, when we employ electronic methods of communication, we often leave electronic “fingerprints” behind, fingerprints that can be traced back to us. Whether we are surveilled by our government, by criminals, or by our neighbors, it is fair to say that never has our ability to shield our affairs from prying eyes been at such a low ebb. The availability and use of secure encryption may offer an opportunity to reclaim some portion of the privacy we have lost. Government efforts to control encryption thus may well implicate not only the First Amendment rights of cryptographers intent on pushing the boundaries of their science, but also the constitutional rights of each of us as potential recipients of encryption's bounty. Viewed from this perspective, the government's efforts to retard progress in cryptography may implicate the Fourth Amendment, as well as the right to speak anonymously, see McIntyre v. Ohio Elections Comm'n, 514 U.S. 334, 115 S.Ct. 1511, 1524, 131 L.Ed.2d 426 (1995), the right against compelled speech, see Wooley v. Maynard, 430 U.S. 705, 714, 97 S.Ct. 1428, 51 L.Ed.2d 752 (1977), and the right to informational privacy, see Whalen v. Roe, 429 U.S. 589, 599-600, 97 S.Ct. 869, 51 L.Ed.2d 64 (1977). While we leave for another day the resolution of these difficult issues, it is important to point out that Bernstein's is a suit not merely concerning a small group of scientists laboring in an esoteric field, but also touches on the public interest broadly defined." You might also have issues of 4th amendment violations. Kindhearts for Charitable Human. Devel. v. Geithner, 647 F. Supp. 2d 857 (N.D. Ohio 2009)3. Quoting the Court: "Plaintiff's motion for partial summary judgment [Doc. 31] be and hereby is granted with regard to its claims: A. That OFAC violated the Fourth Amendment claim when it seized plaintiff's assets without probable cause and prior judicial review and issuance of a warrant for such seizure; B. OFAC's failure to provide notice, and an opportunity to be heard, and its restrictions on plaintiff's access to its documents; and C. OFAC's limitation on the extent to which plaintiffs' blocked funds are available to it to compensate its counsel was arbitrary and capricious and violated the Administrative Procedure Act." You might also be unwittingly in violation of Laws to limit the governments access to financial data: The Right to Financial Privacy Act of 1978 (RFPA; codified at 12 U.S.C. ch. 35, § 3401. You might also be in violation of other constitutionally protected rights. For instance, Is associating your money with other people’s money, freedom of association? Is impairing your ability to obtain privacy the same as a pre-emptive search (4th amendment)? Is making it impossible to use your money a seizure of the value of the money (5th amendment) or seizure (4th amendment.) See Kindhearts v. Treasury. If you force people to speak only certain ways, or to certain people (that's what you think custody is, but it's actually speech and association.) Also, did you know that things people were planning to publish to the public are protected from search and seizure at a higher level than other things. And if you don't tell the person searching or seizing your things that what they're doing is illegal, they can use their ignorance as a defense. Governments have paid $100s of thousands of dollars to individuals for violating this law. So it's useful to carry a copy of this law with you. This may bring up interesting ideas for blockchains, as they are publication. Because of this law: https://www.govinfo.gov/content/pkg/USCODE-2008-title42/pdf/USCODE-2008-title42-chap21A-subchapI.pdf Since all blockchain things were intended to be publically published, you likely are in violation of the law suggesting these rules. With all the times the court has had to overrule unconstitutional laws & rules, perhaps there should an "attempted illegal law making." The lack of accountability is wild. Prosecutorial conduct exists and is prosecuted, why aren't other members of the government held accountable? I wonder if your interference in others peer to peer transactions by forcing certain "coins" to be "held" in certain ways could be considered tortious interference, as it directly affects other people's agreements. For instance your rules might affect how many coins are staked vs un-staked, and other perturbations in the market and network topology. I'm not sure how protected you would be by qualified immunity, and you might be able to be charged in other jurisdictions, perhaps served while you're on vacation in another country, for interfering with the commerce of other nations. This might be amplified if you are found commenting or acting outside your government duties. Interesting questions. As blockchains are communications networks, they are protected by Section 230. There's lots of other theories and case law I've found to help you guys out there. It's important to use all of the defenses available to you. Shoutout to XRP and Coinbase for fighting the good fight for freedom. There are all kind of other unique legal quandaries that require intense thought. For instance. As blockchains are communications networks, they are likely protected by Section 230. Freedom of Speech & Expression: • Cryptocurrency code is protected speech (Bernstein v. DOJ; Junger v. Daley) • Banning code access violates free speech (Universal City Studios v. Corley) • Disclosure mandates compel speech (Wooley v. Maynard; Riley v. Nat’l Federation of Blind) • Vague standards chill protected speech (Reno v. ACLU) • Anonymity enhances free speech (McIntyre v. Ohio Elections Commission) Privacy Rights • Warrantless surveillance violates reasonable expectation of privacy (Carpenter v. US; Kyllo v. US) • Identity verification rules contravene informational privacy (Whalen v. Roe) • Compelled disclosure invades privacy (McIntyre v. Ohio Elections Commission) • Tracking blockchain transactions violates privacy (Carpenter v. US) • Constitutional right to informational privacy (NASA v. Nelson) Freedom of Association • Cryptocurrency communities are expressive associations (Boy Scouts v. Dale; Roberts v. Jaycees) • Identity verification rules violate association (NAACP v. Alabama) • Surveillance deters association (Roberts v. Jaycees) Limits on SEC Power • SEC v. W.J. Howey Co - devised investment contract test • SEC v. C.M. Joiner Leasing Corp - securities laws don’t apply to commodities • Reves v. Ernst & Young - securities laws don’t apply to currency-like notes • SEC v. SG Ltd - no securities where purchasers received website access No Common Enterprise • Gary Plastic Packaging Corp v. Merrill Lynch - no common enterprise with independent control Compelled Speech Violations • Wooley v. Maynard - prohibits compelled speech • Riley v. National Federation of Blind - mandated speech scrutinized Right to Informational Privacy • NASA v. Nelson - constitutional right to information privacy Administrative Law Violations • Retroactive enforcement fails due process (Landgraf v. USI Film Products) • Vague standards violate due process (Sessions v. Dimaya; US v. Davis) • Lack of notice violates due process (Christopher v. SmithKline Beecham; FCC v. Fox Television Stations) • Failed to provide notice and comment (Chamber of Commerce v. SEC) • Arbitrary and capricious actions (Motor Vehicle Mfrs. Assn. of U.S., Inc. v. State Farm Mutual Automobile Ins. Co.) Right to Financial Privacy • Monitoring blockchain transactions violates privacy (Carpenter v. US) • Identity verification rules violate financial privacy (Griswold v. Connecticut) Self-Determination Rights • Restricting cryptocurrency contravenes international law on self-determination (UN Charter, Art 1; ICCPR, Art 1) Cryptocurrencies as Commodities/Currencies • CFTC v. McDonnell - virtual currencies are commodities • U.S. v. Faiella - Bitcoin is currency Unconstitutional Vagueness • Vague laws allow arbitrary enforcement (Johnson v. United States) • Laws must provide fair notice (Connally v. General Construction Co.) Regulatory Overreach • Agencies cannot expand power without Congressional authorization (MCI v. AT&T) • Crypto regulation should come from legislature (Cyan v. Beaver County Employees Retirement Fund) Blockchains Similar to ISPs • Running a blockchain is like being an ISP by providing data access (47 U.S. Code § 230) • ISPs have immunity for third-party content (47 U.S. Code § 230) • Blockchains have user-generated content like ISP sites (47 U.S. Code § 230) • Blockchain users are publishers like ISP users (47 U.S. Code § 230) • Blockchains deserve ISP protections as user-generated content networks (17 U.S. Code § 512) Here's some more facts that I hope cure some of the other misconceptions you have. The laws regarding what you possess and what you know are wildly different, as they should be. You can't possess a cryptocurrency, it's not possessable. When someone steals your purse, you don't have it anymore, they do. When someone steals your private key, you still have it. Because a private key isn't something you have, it's something you know. How many millions of people have written their seed words down somewhere. And how many of you millions have proof that no one else's eyes have seen the light reflected off that page? Every law that treats cryptocurrency as something you have instead of something you know is deeply flawed. Blockchains are about knowledge, not possession. It is fact. It is provable. It is obvious if you do the math. Here's 12 seed words from the BIP 39 word list that most "wallets" use to generate addresses: like february unaware banana paddle excite vanish secret under lounge rich fan If someone assigns value to an address derived from those, do you in fact have dominion and control, because you read those words? Do you not, in fact, have the same exact dominion and control as thousands of others now? Here's a funny one. What if someone assigned value to an address that is 2,000,000,000,000,000,000,000,000,000 deep in the derivation. Could you have possibly even known the value was there? It's computationally impossible to monitor a blockchain for all the possible addresses whose value your seed words might unlock. Thus, you can't even actually know what value a seed word might have, for you can't actually know the near infinite addresses it could access that could have value. And good luck trying to check again every 10 seconds a new block hits. Here's another funny party. You can even derive new addresses from your seed words using different derivation paths, so there's not just one address set. In summary. In cryptocurrency and the blockchain, there is no such thing as possession, there is only knowledge. Thus, the laws that best fit are not those concerning possession, or custody, but those that concern the creation and dissemination of knowledge. If I see that someone has scratched your back, and you know feel obligated to scratch theirs, because you're a good human with the emotion of reciprocity, am I a money transmitter because I witnessed it and would testify to it? Was not value exchange or created? What rules should govern the witnessing and professing of truth? I hope I can educate everyone about this world changing computer science breakthrough that makes truth and it's publication and verification more affordable, free and open than in any other time in the history of man. I pity any man who would stand in the way of technological progress, or worse, attempt to harm those making the world a better place. History has not been kind to such small men. There's a brighter future in store for us all, because of technology and in spite of those that attempt to stifle its progress. bip39 word list: https://github.com/bitcoin/bips/blob/master/bip-0039/english.txt TLDR; Cryptocurrency is something you know, not something you have. A crypto wallet is a keychain, it doesn't hold money it holds keys. When you "transfer" crypto, you didn't actually transfer anything, the things are still right where they always were. Years of wrong thinking about mathematical fact needs to be amended in the halls of power. The job of an educator is a wholesome one. To protect consumers, you should be helping educating American Citizens how to remove middlemen entirely. The arguments that support cash, support cryptocurrency. Washington D.C. is now enforcing their law banning cash bans at local retailers. That's awesome, as cash is a requirement for national security, privacy and protecting the rights of the unbanked and un-bankable. The arguments that support the FTC's case against Amazon leaving consumers with less choice support cryptocurrencies as well. If monopolies are bad and competition is good, then cryptocurrency is good; as it's the first real competitor to credit cards and offers features they can't, like real permanent settlement finality in 13 minutes and irrevocable payments. Sometimes it's easiest to use your attackers force against them. Particularly when what they're attacking is what they're supposed to be promoting and fostering development of. One could say the most effective way of shutting down hackers stealing cryptocurrency, would be free government code audits of public goods and open-source protocols. Friendly government pull requests and security suggestions (which they already give through NIST,) would be a welcome addition to the cryptocurrency and blockchain space! Competition is good. Cryptocurrency is an honest competitor to fiat currencies and Visa/Mastercard monopolies. It is the premier source for undeniable, timestamped truth. A computer science breakthrough. Cryptocurrency still is the best performing asset of all time, and useful for so much more than just profit. It'd be great if the equal protection clause were used to protect us blockchain speakers. The full court administrative state press against blockchain speakers is unconstitutional, and without substantive due process. In the end, decentralization is the only thing preventing hundreds of millions of dollars from being lost at a time. We've seen it over and over again from government regulated entities. Billions of dollars in fines on organizations the SEC regulates. REAL cryptocurrency solves this. Think about why they have bulkheads on ships. So that losses might be small and isolated. You want to creating giant honeypots that will get hacked and exploited. Their service providers they work with will lose their email, phone number, balances and other data on customers. Then that data will be used to victimize the people you're supposed to protect. We've seen this multiple times from the Kroll company working with the government in bankruptcies surrounding, you guessed it, giant government licensed entities. Be part of the solution, not part of the problem. You're at the edge of a bright, peer to peer, trustless, immutable, unstoppable future. It is vital that you consider all of my relevant and substantive comments, as it is your duty under the APA. It's also morally and ethically nice, as you and perhaps your colleagues are being paid well to read my comments, while I'm volunteering to make the world a better place. I hope you see the unique value in the facts you've read here that you will read here that you're unlikely to read anywhere else in the world. Also the comment period was far too short. You gave the world hundreds of pages to read, and yet the world has given you back so few. That alone indicates that you haven't done a good enough job getting the word out to those that this rule would affect, and that you're missing tons of context and implementation details that are vital to make what you're trying to do work. This speaks also, directly to what the APA would consider an "adequate" notice and comment period length. Billions of dollars affected mandates adequate consideration and comment periods. Further, when there's so much information missing, and the misconceptions are so large, so as to be nearly unreconcilable with a workable, enforceable, fair rule. You must re-propose.