Oct. 18, 2023
As an investor outside of the United States, I am deeply concerned about the proposed legislation "Safeguarding Advisory Client Assets" and its potential risks to international investors. While I understand the need for regulations to protect client assets, I believe that the SEC is overreaching its authority when it comes to cryptocurrency and digital assets. Firstly, it is important to note that existing laws already provide a framework for investor protection in many jurisdictions outside of the United States. These laws are designed to safeguard client assets and ensure fair and transparent practices in the financial industry. By imposing additional regulations on foreign financial entities (FFIs), the SEC is disregarding the regulatory oversight already in place and creating unnecessary burdens for international investors. Furthermore, the requirement for FFIs to appoint an agent for service of process in the United States or have offices in the country is an unfair imposition on foreign entities. It assumes that all FFIs must be subject to or consent to U.S. jurisdiction, disregarding the sovereignty of other nations and their regulatory frameworks. This not only undermines international cooperation but also creates barriers for foreign entities to operate in a global market. Additionally, the proposed legislation fails to consider the unique characteristics of cryptocurrency and digital assets. These assets operate on decentralized networks and are not bound by traditional borders or jurisdictions. Imposing strict regulations on FFIs dealing with cryptocurrency and digital assets can stifle innovation and hinder the growth of this emerging industry. It is crucial to approach the regulation of these assets with a nuanced understanding of their technological and global nature. Moreover, the SEC's overreach in regulating cryptocurrency and digital assets can have unintended consequences for international investors. By imposing burdensome requirements on FFIs, the SEC may inadvertently discourage foreign investment in the United States. This could lead to a loss of opportunities for both U.S. businesses and international investors, ultimately hampering economic growth and innovation. Furthermore, the proposed legislation fails to acknowledge the potential benefits that cryptocurrency and digital assets can bring to the global financial system. These assets have the potential to increase financial inclusion, facilitate cross-border transactions, and provide alternative investment opportunities. By imposing excessive regulations, the SEC may hinder the development and adoption of these technologies, limiting their positive impact on the global economy. It is also important to consider the international nature of cryptocurrency and digital asset markets. These markets operate 24/7 across different time zones, allowing investors from around the world to participate. By imposing strict regulations that only cater to U.S. investors, the SEC risks isolating itself from the global market and hindering the growth of the cryptocurrency industry. This could result in a loss of competitiveness for U.S. businesses and a missed opportunity to position the United States as a leader in this rapidly evolving sector. Furthermore, the SEC's proposed legislation fails to address the potential risks associated with excessive regulation. While investor protection is important, it is equally crucial to foster innovation and allow for experimentation in the cryptocurrency and digital asset space. Overregulation can stifle creativity and deter entrepreneurs from entering the market, ultimately limiting the potential benefits that these technologies can bring. Instead of imposing burdensome regulations, the SEC should focus on fostering an environment that encourages responsible innovation and protects investors without stifling growth. This can be achieved through a balanced approach that takes into account the unique characteristics of cryptocurrency and digital assets, while also considering the existing regulatory frameworks in place in other jurisdictions. In conclusion, as an investor outside of the United States, I urge the SEC to reconsider its proposed legislation "Safeguarding Advisory Client Assets" and its potential impact on international investors. The SEC should avoid overreach when it comes to regulating cryptocurrency and digital assets, and instead focus on fostering innovation, protecting investors, and promoting global cooperation. Thankyou for consideration of these comments.