Oct. 23, 2023
Dear Securities and Exchange Commission, I, Allan, am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the goal of enhancing investor protections and addressing gaps in the custody rule, there are important issues that need to be addressed to ensure a fair and effective regulatory framework. First and foremost, I want to emphasize the importance of recognizing the energy efficiency and environmental sustainability of validator hardware in digital asset mining and transaction validation processes. The proposed rule does not adequately acknowledge the advancements in technology that have led to the development of energy-efficient validator hardware. It is crucial that the SEC recognizes the efforts made by industry participants to reduce their environmental impact and encourages the adoption of energy-efficient practices in digital asset activities. Furthermore, the proposed regulations introduce a complex and burdensome reporting framework for participants in decentralized finance (DeFi), including redundant reporting requirements for multiple parties involved in the same transactions. This not only creates excessive administrative work for market participants but also hinders the SEC's ability to gather accurate and meaningful data. To ensure effective oversight and reporting in DeFi, the SEC should streamline the reporting requirements to minimize duplication and promote efficiency in data collection. To address these concerns, I urge the SEC to conduct a thorough assessment of the energy efficiency of validator hardware used in digital asset mining and transaction validation. By recognizing and incentivizing the adoption of energy-efficient practices, the SEC can promote a more sustainable, environmentally friendly, and energy-efficient future Additionally, the SEC should revise the reporting requirements in DeFi to eliminate redundancy and ensure that reporting obligations are clear, concise, and practical for market participants. This will enable efficient oversight and ensure that valuable resources are not wasted on unnecessary administrative burdens. In conclusion, it is crucial for the SEC to acknowledge and promote the adoption of energy-efficient validator hardware in digital asset mining and transaction validation. Furthermore, the reporting requirements in DeFi should be carefully designed to avoid duplication and reduce unnecessary administrative burden while still facilitating effective oversight. Thank you for considering my comments on the proposed rule. I hope that these concerns are taken into account in the final regulations to ensure a well-balanced and effective framework for safeguarding advisory client assets. Sincerely, Allan