Oct. 19, 2023
Securities and Exchange Commission File Number "S7-04-23" 100 F Street NE Washington, DC 20549 Dear SEC Commissioners, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" File Number [S7-04-23]. While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have several concerns regarding the potential negative impact of the proposed regulations. Specifically, I would like to draw attention to two critical areas: the potential negative impact on the tokenization of assets and the inadequate limitation of reporting requirements for protocols run outside the United States. Firstly, I am concerned that the proposed rules may hinder the tokenization of traditional assets, thereby limiting the potential benefits of blockchain technology. Tokenization has emerged as an innovative method of enhancing liquidity, reducing costs, and increasing accessibility to a wide range of assets. However, the proposed regulations may impose burdensome compliance requirements that could stifle the growth and adoption of tokenization. It is essential for the SEC to consider the unique nature of tokenized assets and tailor the proposed rules accordingly, ensuring that regulatory measures do not hinder technological advancement and market innovation. Additionally, I am troubled by the inadequate limitation of reporting requirements for protocols run outside the United States and users located abroad. The global nature of the digital asset ecosystem necessitates a thoughtful and balanced approach to regulation to avoid unintended consequences or jurisdictional conflicts. While it is crucial to protect investors and safeguard client assets, the proposed regulations should include clear guidelines for reporting requirements applicable to protocols or entities operating outside the United States. Moreover, it is necessary to recognize the potential extraterritorial impact on non-U.S. users and their ability to fully comply with the proposed rules. Striking a balance between investor protection and cross-border innovation will be vital to fostering an inclusive and competitive digital asset marketplace. The aforementioned concerns highlight the need for the SEC to carefully reconsider the proposed regulations to ensure that they promote innovation and international cooperation while effectively safeguarding client assets. By embracing the benefits of tokenization and addressing the challenges associated with cross-border operations, the SEC can not only protect investors but also position the United States as a leader in the digital asset landscape. Thank you for considering my public comment on the "Safeguarding Advisory Client Assets" proposal. I urge you to carefully evaluate the potential negative impact on the tokenization of assets and the need for adequate limitation of reporting requirements for entities operating outside the United States. I appreciate the opportunity to contribute to this important regulatory process, and I remain hopeful that my concerns will be taken into consideration. Please let me know if there are any other areas of concern or specific questions related to the proposal that I may assist with in crafting a public comment. Thank you again for your attention to this matter. Sincerely, Tom Ford.