Oct. 28, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the Securities and Exchange Commission's (SEC) proposed rule on safeguarding advisory client assets. While I applaud the aim of enhancing investor protections, there are certain aspects of the proposed rule that require further consideration and revision. Specifically, I would like to draw attention to the insufficient consideration of blockchain scalability solutions. The proposed rules do not adequately address the unique characteristics and challenges of digital assets, such as cryptocurrencies, which are built on blockchain technology. This omission has the potential to hinder the adoption and scalability of digital assets, limiting their benefits to investors and the broader economy. Cryptocurrencies and other digital assets have the potential to transform finance by enabling efficient, secure, and transparent transactions. Blockchain technology, the underlying technology behind these digital assets, offers decentralized and immutable record-keeping capabilities, reducing the risk of fraud and improving transparency. However, the current regulatory uncertainties surrounding digital assets hinder their widespread adoption and integration into traditional financial systems. One of the key challenges in regulating digital assets is the scalability of blockchain technology. As the adoption of digital assets grows, the existing blockchain infrastructure may face limitations in processing transactions at scale. The SEC's proposed rules should proactively address this scalability issue by incentivizing the development and implementation of scalable blockchain solutions. By incorporating provisions that encourage the exploration and development of blockchain scalability solutions, the SEC can foster innovation in the digital asset space while ensuring investor protection. For example, the SEC could collaborate with industry experts and stakeholders to establish standards for scalable blockchain technology or provide regulatory relief for firms that demonstrate the use of such solutions. Furthermore, the proposed rules should address the potential impact of scalability issues on investors and the broader economy. Failure to adequately consider and address these issues may stifle innovation, limit market participation, and impede capital formation. As a concerned citizen, I believe it is crucial for the SEC to actively engage with stakeholders and industry experts to develop a regulatory framework that promotes both investor protection and technological innovation. In conclusion, while the SEC's proposal on safeguarding advisory client assets aims to enhance investor protections, it falls short in considering the unique challenges faced by digital assets built on blockchain technology. By addressing the scalability concerns related to blockchain, the SEC can contribute to the growth and advancement of the digital asset ecosystem, fostering innovation and providing greater opportunities for investors. I urge the SEC to consider the points raised in this public comment and revise the proposed rule accordingly. Thank you for considering my concerns. I appreciate the opportunity to provide input on this important issue. Sincerely, A Concerned U.S. Citizen