Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing in response to the proposed rule on "Safeguarding Advisory Client Assets." While I commend the SEC for taking steps to enhance investor protections and address gaps in the custody rule, I have several concerns regarding the lack of clarity in the definition of digital assets. Digital assets, particularly cryptocurrencies that are built on blockchain technology, have the potential to revolutionize the financial industry. However, the rapidly evolving nature of these assets poses unique challenges for regulators. My concern lies specifically in the ambiguity surrounding the classification and treatment of digital assets under the proposed rule. Without clear and concise definitions, market participants may struggle to interpret the regulations correctly, leading to inconsistent compliance and potential misinterpretation. The lack of clarity in the definition of digital assets leaves room for regulatory arbitrage, which could undermine the intended purpose of the rule and create an uneven playing field for market participants. Furthermore, I would like to highlight the fact that digital assets, including cryptocurrencies, are at their core representations of speech. They embody the right to communicate and transfer value in a decentralized manner. Any regulatory approach must carefully consider the need to protect free speech rights while ensuring investor protection. While I acknowledge the need for careful oversight and regulation in this rapidly evolving space, it is crucial that any regulatory measures take inspiration from our constitutional principles that safeguard the freedom of speech. By treating digital assets as publications, we can strive to strike a balance between promoting investor protection and preserving the fundamental rights and innovative potential that these technologies represent. In light of the aforementioned concerns, I urge the SEC to provide clear and comprehensive guidance on the definition and treatment of digital assets within the proposed rule. This will provide market participants with the necessary clarity to comply with the regulations and foster a more robust and innovative financial ecosystem. Thank you for considering my comments. I appreciate your willingness to engage with stakeholders and seek input on these important matters. Sincerely, Zenon Shandro