Oct. 24, 2023
To Whom It May Concern, I am writing to provide my public comment on the proposed rule, "Safeguarding Advisory Client Assets," from the Securities and Exchange Commission (SEC) regarding the safeguarding of client assets by investment advisers. As an interested party in the financial industry, I have concerns and issues that I believe need to be addressed in order to create a more effective and balanced regulatory framework. Firstly, I am troubled by the inadequate consideration given to self-custody solutions in the proposed rules. It is essential to foster the development of user-controlled asset management, particularly in the context of decentralized finance (DeFi). However, the proposed regulations do not adequately recognize the role and potential benefits of self-custody. By failing to provide clear guidelines and allowances for self-custody, the SEC is hindering innovation and limiting opportunities for individuals to have greater control over their own assets. Furthermore, the proposed regulations raise concerns about confusion and inefficiency. The rules create reporting requirements for various participants in DeFi, without sufficiently accounting for the unique characteristics of decentralized systems. This could result in multiple, inconsistent reports being generated for the same transaction, leading to unnecessary complexity and potential compliance challenges. It is imperative that the SEC take a more nuanced and comprehensive approach to ensure that regulatory requirements align with the decentralized nature of DeFi. Additionally, it is important to address any potential conflicts or inconsistencies that may arise between the proposed SEC rules and existing laws or regulations. Harmonization and clarity in regulatory frameworks are crucial for maintaining investor confidence and facilitating the growth and development of the financial industry. As the rules move forward, it is essential that the SEC carefully considers any potential duplicative, overlapping, or conflicting federal rules to avoid unnecessary burdens on market participants and to promote consistent regulatory practices. In conclusion, it is crucial for the SEC to take a more comprehensive and nuanced approach in addressing the concerns and issues associated with the proposed rule, "Safeguarding Advisory Client Assets." This includes recognizing the importance of self-custody solutions in promoting user-controlled asset management, avoiding unnecessary complexity in reporting requirements in decentralized systems like DeFi, and ensuring consistency and harmonization with existing laws and regulations. Thank you for considering my comments on this proposal. I urge the SEC to carefully assess the potential impact of the proposed rules and make necessary adjustments to strike a balance between investor protection, innovation, and regulatory effectiveness. Sincerely, Asi Hassan