Oct. 28, 2023
Asi Hassan Securities and Exchange Commission Division of Investment Management 100 F Street NE Washington, D.C. 20549-8549 Re: Proposed Rule: Safeguarding Advisory Client Assets (File Number S7-06-20) Dear Sir/Madam, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets" (File Number S7-06-20) issued by the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the proposed rule may have unintended negative consequences on tokenization of assets and impact abroad. One potential issue I would like to address is the potential negative impact on the tokenization of assets. The proposed rules, particularly in defining assets and discussing custody of crypto assets, could inadvertently hinder the progress of blockchain technology and limit the potential benefits it offers to investors and the financial industry. The SEC should consider providing more clarity and flexibility in the rules to accommodate the evolving landscape of tokenization and ensure that innovation is not stifled by overly prescriptive regulations. Furthermore, I am concerned about the impact abroad. The proposed regulations do not sufficiently limit reporting requirements for protocols operated outside the United States and for users based outside the United States. This lack of clarity may lead to regulatory uncertainty and hinder global participation and collaboration in tokenization efforts. It is important for regulatory frameworks to strike a balance between investor protection and fostering global innovation and competition. In order to address these concerns, I would kindly request the SEC to revisit and consider revising the proposed rule to mitigate any potential negative impact on the tokenization of assets and improve the clarity and applicability of regulations to participants based outside the United States. Additionally, I would like to take this opportunity to express my appreciation for the SEC's comprehensive economic analysis of the proposed rule. I believe that a thorough understanding of the costs and benefits associated with these regulations is crucial, as it ensures that policy decisions are based on a well-informed assessment of the potential impact on market participants. In conclusion, I strongly urge the SEC to carefully consider the potential negative consequences on tokenization of assets and the impact abroad when finalizing the rule. By promoting clear and flexible regulations, the SEC can achieve a balance between investor protection and fostering innovation and competition in the rapidly evolving landscape of digital assets. Thank you for considering my comments. I trust that you will give due consideration to the concerns I have raised, as well as those from other interested parties, in your final rule. Sincerely, Asi Hassan