Oct. 14, 2023
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. Unlike traditional financial systems, they are not governed by a central authority. This decentralized nature is one of the key features that attract individuals and businesses to engage with these assets. By imposing stringent regulations on the custody and safeguarding of client assets, the SEC risks undermining the very essence of cryptocurrencies and digital assets. Furthermore, it is important to note that existing laws already provide a framework for the regulation of cryptocurrencies and digital assets. For example, the Securities Act of 1933 and the Securities Exchange Act of 1934 already cover securities offerings and trading activities related to cryptocurrencies. These laws ensure that investors are protected from fraudulent activities and provide avenues for legal recourse in case of misconduct. Therefore, the SEC's proposal to expand its regulatory authority in this area seems unnecessary and redundant. Additionally, the SEC's proposed rule could have unintended consequences for small businesses and startups in the cryptocurrency and digital asset space. The compliance costs associated with implementing the proposed safeguarding requirements could be burdensome for these entities, potentially stifling innovation and hindering their ability to compete in the market. It is important to foster an environment that encourages entrepreneurship and technological advancements, rather than imposing excessive regulatory burdens that could deter new entrants and limit competition. Moreover, the SEC's approach to regulating cryptocurrencies and digital assets should be mindful of the global nature of this industry. Cryptocurrencies and digital assets operate on a global scale, transcending geographical boundaries. Imposing strict regulations that are not aligned with international standards could put U.S. businesses at a disadvantage and hinder their ability to compete in the global market. It is crucial for the SEC to consider a balanced approach that promotes innovation while ensuring investor protection, taking into account the evolving international regulatory landscape. In conclusion, while investor protection is of utmost importance, the SEC's proposal "Safeguarding Advisory Client Assets; Reopening of Comment Period" represents an overreach in its regulation of cryptocurrencies and digital assets. The unique decentralized nature of these assets, existing laws that provide a framework for regulation, potential burdens on small businesses and startups, and the need for a global perspective all contribute to the argument against the proposed rule. It is essential for the SEC to strike a balance between investor protection and fostering innovation in the cryptocurrency and digital asset industry. Excessive regulation could stifle growth, hinder competition, and put U.S. businesses at a disadvantage in the global market. Therefore, I urge the SEC to reconsider its approach and take into account the nuanced complexities of this emerging industry. Sincerely, GEOFFREY SNYDER