Oct. 23, 2023
Derren Desouza [REDACTED] 23/10/2023 Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Public Comment on Proposal "Safeguarding Advisory Client Assets" - File Number S7-05-21 Dear Sir/Madam, I write to submit a public comment on the proposed rule "Safeguarding Advisory Client Assets," Regulation S7-05-21. While I commend the Securities and Exchange Commission (SEC) for addressing the crucial matter of protecting client assets, I have concerns regarding potential overreach of regulatory authority and its implications for digital assets, particularly with regard to privacy. 1. Potential Overreach of Regulatory Authority: The proposed rule raises concerns about the potential overreach of the SEC's regulatory authority, encroaching on areas that should fall under the jurisdiction of other agencies. It is essential to ensure that regulatory responsibilities are appropriately delineated to avoid duplication and conflicting regulations. In particular, the regulation of digital assets, such as cryptocurrencies, falls within the purview of blockchain technology and may require specialized expertise beyond the SEC's mandate. 2. Digital Assets or Crypto: Digital assets, like cryptocurrency, have been transformative in the financial industry, providing new opportunities for investors and innovators alike. However, the regulatory landscape surrounding these assets remains uncertain, which poses challenges for both market participants and regulators. It is crucial for the SEC to approach regulatory measures in a manner that fosters innovation while protecting investors from potential risks. Privacy Concerns: Within the realm of digital assets, privacy has become a prominent concern. Blockchain technology, the foundation of many digital assets, offers inherent privacy benefits, such as pseudonymity. While ensuring investor protection is paramount, regulatory efforts must strike a delicate balance that preserves individual privacy rights. It is crucial that any proposed regulatory framework recognizes and respects the privacy concerns associated with digital assets, and grants adequate flexibility to market participants to implement privacy-enhancing solutions without compromising investor safeguards. Considering these concerns, I urge the SEC to consider the following recommendations when finalizing the proposed rule: 1. Collaboration with Other Agencies: In cases where the regulation of client assets intersects with digital assets and blockchain technology, the SEC should collaborate with relevant regulatory agencies to develop a comprehensive and cohesive regulatory framework. This approach will help avoid regulatory overlap, reduce compliance burdens, and foster coordination among agencies responsible for overseeing different aspects of the digital asset ecosystem. 2. Tailored Regulatory Measures for Digital Assets: Digital assets present unique challenges and opportunities, and a one-size-fits-all approach may stifle innovation and hinder the potential benefits of this new technology. The SEC should consider developing specialized guidelines for digital assets, keeping in mind regulatory objectives but also allowing flexibility for evolving practices and customized industry standards. 3. Balancing Investor Safeguards and Privacy Rights: Privacy is a fundamental right that should be respected, even in the context of comprehensive regulation. The SEC should prioritize collaboration with experts in privacy and digital asset technology to establish safeguards that strike an appropriate balance between investor protection and individual privacy rights. I appreciate the opportunity to provide feedback on this important proposal. It is crucial that regulatory frameworks adapt to the evolving landscape of financial markets and digital assets to ensure effective investor protection. I trust that the SEC will consider these concerns and recommendations as it moves forward in finalizing rules under the proposed "Safeguarding Advisory Client Assets" regulation. Thank you for your attention to this matter. Sincerely, Derren Desouza