Oct. 14, 2023
Dear SEC, As an advocate for the cryptocurrency and digital asset industry, I strongly oppose the proposed legislation by the SEC regarding the safeguarding of advisory client assets. While investor protection is of utmost importance, the SEC's approach in this proposal exhibits overreach and fails to consider the unique characteristics of cryptocurrencies and digital assets. Firstly, it is crucial to recognize that cryptocurrencies operate on decentralized networks, which inherently differ from traditional financial systems. The proposed safeguarding rule, which is primarily designed for traditional assets, does not adequately address the distinct nature of cryptocurrencies. Imposing the same requirements on digital assets as on traditional assets disregards the decentralized nature of cryptocurrencies and undermines their potential for innovation and growth. Furthermore, the SEC's proposal fails to acknowledge the existing regulatory framework surrounding cryptocurrencies. Cryptocurrencies are already subject to various regulations, such as anti-money laundering (AML) and know your customer (KYC) requirements. These regulations ensure that illicit activities are minimized and investor protection is upheld. By imposing additional burdensome requirements, the SEC risks stifling innovation and hindering the development of the cryptocurrency industry. Additionally, the SEC's proposal overlooks the potential benefits of cryptocurrencies and digital assets. These technologies have the potential to revolutionize financial systems, increase financial inclusion, and promote economic growth. By imposing stringent regulations without considering the unique characteristics and potential benefits of cryptocurrencies, the SEC is hindering the industry's progress and limiting the opportunities for investors and businesses alike. Moreover, it is important to note that the SEC's jurisdiction should be limited to securities and investment products. Cryptocurrencies, such as Bitcoin and Ethereum, are not classified as securities under existing laws. The SEC's attempt to extend its regulatory authority to cryptocurrencies exceeds its mandate and encroaches upon the jurisdiction of other regulatory bodies, such as the Commodity Futures Trading Commission (CFTC). This overreach creates regulatory uncertainty and hampers the development of a clear and consistent regulatory framework for cryptocurrencies. Furthermore, the SEC's proposal fails to consider the potential negative consequences of excessive regulation. Overregulation can stifle innovation, drive businesses offshore, and limit the accessibility of cryptocurrencies to retail investors. It is essential to strike a balance between investor protection and fostering innovation. The SEC should focus on providing guidance and clarity rather than imposing burdensome regulations that may have unintended consequences. In conclusion, the SEC's proposed legislation regarding the safeguarding of advisory client assets in the context of cryptocurrencies and digital assets exhibits overreach and fails to consider the unique characteristics and potential benefits of these technologies. Imposing the same requirements on cryptocurrencies as on traditional assets disregards their decentralized nature and hampers innovation. The SEC should recognize the existing regulatory framework surrounding cryptocurrencies and avoid imposing additional burdensome requirements that may hinder the industry's progress. Furthermore, the SEC's attempt to extend its regulatory authority to cryptocurrencies exceeds its mandate and creates regulatory uncertainty. Excessive regulation can stifle innovation and limit accessibility to cryptocurrencies. It is crucial for the SEC to strike a balance between investor protection and fostering innovation by providing guidance and clarity rather than imposing overly burdensome regulations. Thank you for considering my comment against the proposed legislation. I believe it is essential for regulators to approach the cryptocurrency and digital asset industry with an open mind, recognizing its unique characteristics and potential benefits. By doing so, we can foster innovation, promote economic growth, and ensure investor protection in this rapidly evolving landscape. BR, Cools Yoran