Subject: S7-04-23: Webform Comments from Julia Harmon
From: Julia Harmon
Affiliation: None

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