Oct. 22, 2023
?: ?: Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets." While I understand the importance of enhancing investor protections and addressing gaps in the custody rule, I believe that the proposed rule may have a potential negative impact on peer-to-peer exchanges. Peer-to-peer exchanges have emerged as innovative platforms that promote user autonomy and financial sovereignty. However, the proposed rule may hinder the growth and development of these exchanges by imposing stringent requirements and limitations. By expanding the coverage to include a broader range of investments held in a client's account, the proposed rule may subject peer-to-peer exchanges to unnecessary regulatory burdens. This could limit the ability of individuals to transact directly with one another without the need for intermediaries. Furthermore, the rule's focus on requiring assets to be maintained with a qualified custodian poses challenges for peer-to-peer exchanges that rely on decentralized custody solutions. These exchanges use blockchain technology to facilitate transactions directly between users, eliminating the need for traditional custodial services. Imposing custodial requirements in such scenarios may stifle innovation and hinder the adoption of promising technologies. Additionally, the proposed rule's amendments to the surprise examination requirement may disproportionately affect peer-to-peer exchanges. These exchanges typically operate on a decentralized model, where users have exclusive control over their assets. Requiring surprise examinations for such exchanges may not only be impractical but may also undermine the fundamental principles of decentralization and user autonomy. I believe that instead of imposing burdensome regulations, the SEC should foster an environment that encourages innovation and supports the growth of peer-to-peer exchanges. These platforms have the potential to offer individuals increased financial autonomy, lower transaction costs, and improved access to diverse investment opportunities. Moreover, it is important to consider that the existing regulatory framework already addresses fraudulent practices and investor protection concerns. Existing laws, such as the Securities Act of 1933 and the Securities Exchange Act of 1934, offer safeguards against fraudulent activities and provide avenues for legal recourse. It may be more appropriate to enforce existing laws efficiently rather than burdening peer-to-peer exchanges with additional regulatory requirements. In conclusion, I urge the Securities and Exchange Commission to carefully consider the potential negative impact on peer-to-peer exchanges when finalizing the "Safeguarding Advisory Client Assets" rule. Imposing stringent regulations on these innovative platforms may hinder their development and limit the benefits they offer to users. Instead, the SEC should foster an environment that encourages innovation while ensuring investor protection through strict enforcement of existing laws. Thank you for considering my comments. I trust that you will take them into account during the rulemaking process. Sincerely, Sent with Proton Mail secure email.