Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule for safeguarding advisory client assets. While I appreciate the aim to enhance investor protections and address gaps in the custody rule, I worry about the potential negative impact on decentralized finance (DeFi) and the growth of digital assets, specifically cryptocurrencies. The proposed rule's broad scope and requirements may hinder the growth and development of decentralized finance projects. One of the defining characteristics of DeFi is its open and permissionless nature, which allows for innovation and potential financial inclusion. However, the proposed rule could impose regulatory hurdles and limit the ability of decentralized finance platforms to operate freely and provide valuable services to a broader range of investors. Furthermore, the rule's focus on digital assets or cryptocurrencies raises concerns. Digital assets, such as cryptocurrencies, have transformed the financial landscape and shown great potential for innovation in finance. However, regulatory uncertainties surrounding these assets have posed challenges for their widespread adoption. Rather than imposing stringent regulations, it would be more beneficial to focus on developing a regulatory framework that fosters innovation while ensuring investor protection. I urge the Securities and Exchange Commission to consider the potential negative consequences on the growth and development of decentralized finance projects and digital assets. It is crucial to strike a balance between investor protection and fostering innovation in this rapidly evolving field. By creating a supportive regulatory environment, we can unlock the potential of decentralized finance and digital assets to drive financial inclusion and economic growth. Thank you for considering my concerns. I believe it is essential to carefully evaluate the potential impact of these proposed rules on the future of decentralized finance and digital assets. Sincerely, Karol