Oct. 15, 2023
Dear SEC Commissioners,? ? I write to you today to express my concerns about the SEC proposal to redesignate and amend the the Investment Advisers Act of 1940. The proposal, while well-intentioned, raises several issues that could inadvertently harm both the financial industry and the investors it serves. The following are my points of concern. OVERREACH: The SEC's proposal to expand the rule from "funds or securities" to "assets" is an overreach when dealing with cryptocurrency and digital assets. This expansion would subject advisors with custody of client crypto assets to unnecessary requirements that waste time, don't make sense for the type of asset it is, and ultimately hinder growth. Over-regulating an emerging technology and industry hurts innovation and humanity. It stifles happiness and has a chilling effect on all important aspects of thriving in a modern society that has outgrown dated financial schemes and systems. CLARITY The unique nature of cryptocurrency and other decentralized assets with private keys, means they may not fit neatly into the existing regulatory framework. Clear guidelines that separate requirements between traditional financial products and decentralized assets should be created to prevent problems with compliance. A person using DeFi blockchain products should not be hindered by a rule made for an old system. In fact, the rules should support and protect an investor on their journey to financial sovereignty with the use of blockchain. EXCESSIVE REPORTING The proposal's requirement for an annual audit for each private fund is too challenging for funds that include cryptocurrencies. Mandating annual audits without addressing the unique complexities of cryptocurrencies wastes precious time and acts as a sabotaging force. Traditional auditing methods are not fully equipped to handle the nuances of digital assets. Without specific guidelines, we risk creating a system that is not only ineffective but also prone to errors and fraud. The proposal must offer clear and easy guidelines for auditing digital assets to prevent this. JURISDICTION: A governmental body exerting will over a person's financial decisions is outside the scope of the SEC, which is supposed to help investors, who are free human beings. Investors should be at liberty to choose their own risk levels without a paternalistic agency imposing unnecessary rules. The goal should be to empower people, not limit their options under the guise of protection. CRYPTOCURRENCIES: Digital currencies are unique, and very new. They are more than assets, and not like securities. They are a voluntary cash-like product that facilitates low cost money transfer, financial autonomy, transparent spending and transacting. Every day new innovations spring up in blockchain technology, so it is imperative not to stifle this innovation. In a new era, where everything seems to be changing, blockchains will help us create better systems for humanity at large. This alone is reason enough to make sure extreme consideration is taken with any new regulations. Burdening future generations with the same excessive rules we are dealing with now would be an inexcusable failure. In conclusion, while the proposal's aim to enhance investor protection is commendable, its current form raises significant concerns that could have far-reaching negative implications. I strongly urge the Commission to take these points into account and revise the proposal accordingly.? ? Thank you for your attention to these critical issues. Sincerely, L. Whalen