Oct. 28, 2023
Dear Securities and Exchange Commission, I am writing as a concerned U.S. citizen to express my views and concerns regarding the proposed rule titled "Safeguarding Advisory Client Assets" by the Securities and Exchange Commission (SEC). While I understand the importance of safeguarding client assets and enhancing investor protections, I have several concerns about the potential negative impact of the proposed rule on decentralized finance (DeFi) and digital assets, particularly cryptocurrency. Decentralized finance has emerged as a groundbreaking advancement in the financial industry, leveraging blockchain technology to provide innovative financial services. However, the proposed rule may unintentionally hinder the growth and development of DeFi projects, limiting innovation and potentially undermining financial inclusion efforts. It is crucial to strike a balance between investor protections and facilitating technological advancements that have the potential to reshape the financial landscape for the better. One specific area of concern is the treatment of digital assets, including cryptocurrencies, under the proposed rule. It is essential to recognize that digital assets are a rapidly evolving and dynamic asset class, presenting unique challenges and opportunities. The rule should be crafted in a manner that does not stifle innovation or impose excessive regulatory burdens that surpass their intended purposes. While I acknowledge the need to ensure the protection of client assets, the proposed rule's approach to addressing digital assets may inadvertently create regulatory uncertainties. Regulatory clarity is paramount in fostering an environment that encourages responsible innovation while safeguarding investor interests. Therefore, I strongly urge the SEC to engage with industry stakeholders and experts in the field of decentralized finance and digital assets to develop a framework that strikes an appropriate balance between regulatory oversight and innovation. Moreover, I believe it is crucial for the SEC to consider the potential unintended consequences of the proposed rule on small businesses within the DeFi ecosystem. Start-ups and emerging enterprises in the decentralized finance space often operate as small entities with limited resources. Imposing onerous compliance requirements and costs on these entities may stifle their growth and deter innovation from flourishing in the United States. To this end, I invite the SEC to explore alternative approaches that address concerns relating to investor protections and client asset safeguarding without placing undue burdens on small businesses. By engaging in an open and collaborative dialogue with industry participants, the SEC can foster an environment that supports responsible innovation while ensuring strong investor protections. In conclusion, I appreciate the SEC's ongoing efforts to enhance investor protections through the proposed rule. Nevertheless, I firmly believe that the rule should take into account the unique characteristics and potential of decentralized finance and digital assets. By fostering a regulatory environment that supports innovation, ensures transparency, and strikes a balance between market growth and investor protection, the SEC can position the United States as a world leader in financial technology while safeguarding the interests of all stakeholders. Thank you for considering my concerns as you review the public comments on this proposed rule. I trust that my perspectives and suggestions will be given due consideration as the SEC formulates its final decisions. Sincerely, A Concerned U.S. Citizen