Oct. 25, 2023
Dear Sir/Madam: I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets" by the Securities and Exchange Commission (SEC). I believe that certain aspects of the proposal may have unintended negative consequences and hinder the potential benefits of tokenization of assets. Digital assets, such as cryptocurrencies, have emerged as transformative innovations in the financial sector, with the potential to revolutionize traditional asset classes. However, the regulatory uncertainties surrounding digital assets have posed significant challenges for their widespread adoption. It is crucial that any regulatory framework encompasses the unique characteristics of these assets while providing appropriate investor protections. One of my concerns is that the proposed rule does not adequately address the complexities of digital assets or provide clear guidance on how investment advisers should safeguard them. The lack of specific provisions regarding digital assets and the challenges in demonstrating exclusive control can lead to confusion and hinder the potential growth and innovation in this space. It is essential for the SEC to strike a balance between investor protection and fostering innovation in the digital asset ecosystem. Furthermore, the SEC is using heavy-handed litigation to create laws, overstepping their authority granted by Congress. In light of these concerns, I urge the SEC to consider leaving digital assets (virtually all have been or will be determined property (as IRS has concluded) or commodities, and leave oversight to the CFTC (which will probably be mandated by Congress), and in the meantime use more nuanced approach to regulating digital assets to earn lost trust. This could involve collaborating with industry stakeholders, conducting thorough research, and seeking public input to create a regulatory framework that both protects investors and enables innovation to thrive. By doing so, the SEC can position itself as a global leader in fostering a vibrant digital asset ecosystem. Sincerely, Brenen Hofstadter Frisco, Texas