Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to submit my public comment on the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have concerns regarding the potential negative impact on investor access to digital assets and the confusion that may arise from the reporting requirements for participants in DeFi. The proposed rules may restrict investor access to digital assets, limiting their ability to participate in this emerging asset class. As the digital asset market continues to evolve, it is crucial that regulations strike a balance between protection and innovation. While safeguarding client assets is important, regulations should not prohibit investors from exploring new opportunities and diversifying their portfolios. By imposing overly burdensome requirements, the proposed rules may inadvertently stifle investor access and impede the growth of the digital asset market. Furthermore, the reporting requirements for different participants in DeFi are confusing and could lead to inconsistent and redundant reports for the same transaction. The proposed regulations create reporting requirements for multiple participants in DeFi, leading to an overly complex and convoluted system. This could result in operational inefficiencies and hinder market transparency. Instead, the SEC should work towards creating a standardized and streamlined reporting framework that minimizes confusion and duplication of efforts. In addition to these concerns, I believe that investor education plays a crucial role in protecting investors. Rather than solely relying on regulations, it is important to prioritize investor education and empower individuals to make informed investment decisions. By promoting financial literacy and providing resources for investors to understand the risks and benefits of different asset classes, we can create a more resilient and informed investor community. I appreciate the SEC's efforts to evaluate the costs and benefits of the proposed rule. However, I urge the SEC to consider the potential negative impact on investor access to digital assets and the confusion that may arise from the reporting requirements for participants in DeFi. By addressing these concerns and promoting investor education, we can strike a balance between investor protection and enabling innovation and growth in the market. Thank you for considering my comments. I hope that the SEC carefully assesses the potential unintended consequences of the proposed rule and works towards a regulatory framework that fosters investor access and market efficiency, while providing the necessary safeguards. Sincerely, Matt