Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to express my deep concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While I recognize the importance of enhancing investor protections, I must highlight the potential negative impact these rules may have on the growth and development of decentralized finance (DeFi) projects, limiting innovation and potential financial inclusion. Firstly, the proposed rule's extensive reporting requirements pose serious challenges to privacy and safety. By mandating the collection and disclosure of sensitive financial data and social security numbers to multiple third parties, there is an increased risk of theft and fraud. We must prioritize the privacy of individuals and ensure that their personal information remains protected. Furthermore, implementing such stringent regulations may stifle the rapid pace of innovation within the DeFi sector. DeFi projects often rely on decentralized systems and smart contracts to facilitate financial transactions and eliminate the need for intermediaries. These projects have democratized access to financial services, particularly for the 1.7 billion adults worldwide who remain unbanked. Imposing burdensome regulations may deter entrepreneurs and developers from creating pioneering solutions that challenge traditional financial institutions. It is crucial to strike a balance between investor protection and fostering innovation. Regulation should be tailored to the specific risks posed by each type of investment, rather than applying a one-size-fits-all approach. Overregulation, particularly in the rapidly evolving field of DeFi, may impede progress and prevent the potential benefits these projects can bring to society. In considering the proposed rule, it is vital to take into account the potential unintended consequences that may arise. While investor protection remains a top priority, we must also nurture new financial technologies and encourage the development of inclusive financial systems. I urge the Securities and Exchange Commission to carefully weigh the potential negative impact on decentralized finance as well as the privacy concerns raised by these rules. By adopting a more nuanced and flexible approach, we can ensure investor protection while empowering innovation and enabling financial inclusion. Thank you for your attention to this matter. Sincerely, Anonymous