Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While I understand the intention behind the rule and the desire to enhance investor protections, I believe there are potential issues of regulatory overreach that need to be considered. One area of concern is the proposed requirement to collect user information for participants in decentralized finance (DeFi). As the rule aims to expand the coverage to include a broader range of investments, it may inadvertently force many DeFi participants to collect and store sensitive taxpayer information without adequate safeguards. This raises significant concerns over the potential for identity theft and the creation of potential honey pots for such criminal activities. Identity theft is a serious issue that can have severe consequences for individuals and their financial well-being. By requiring the collection and storage of sensitive taxpayer information by DeFi participants, the proposed rule may inadvertently expose individuals to an increased risk of identity theft. It is essential to consider the potential consequences and to ensure that adequate safeguards are in place to protect individuals' personal and financial information. Furthermore, it is important to note that the oversight and regulation of taxpayer information collection and protection should primarily fall within the jurisdiction of other agencies with the necessary expertise in this field. The Securities and Exchange Commission (SEC) may exceed its regulatory authority by encroaching on areas that should be regulated by those specialized agencies, thus leading to an unnecessary duplication of efforts and potential confusion regarding compliance requirements. Moreover, the proposed rule's impact on the DeFi ecosystem needs to be thoroughly evaluated. DeFi has gained significant popularity and has the potential to provide financial services to underserved communities, improve financial access, and promote innovation. Imposing stringent reporting requirements on DeFi participants could stifle the growth and development of this sector, potentially inhibiting the positive impact it can have on financial inclusion. In light of these concerns, I urge the SEC to carefully consider the potential unintended consequences of the proposed rule on identity theft and the regulatory oversight of sensitive taxpayer information. By working with relevant agencies specializing in data protection and ensuring proper safeguards, the SEC can avoid overstepping its regulatory authority and mitigate the risk of identity theft in the process. Thank you for considering my comments. I appreciate the SEC's dedication to investor protection, and I hope that these concerns are taken into account during the rulemaking process. Sincerely, Julia Harmon