Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to express my strong concerns regarding the "Safeguarding Advisory Client Assets" proposal currently under review. While I understand the importance of enhancing investor protections, it seems that certain aspects of the proposed rule may have a negative impact on decentralized finance (DeFi) and hinder its potential for growth, innovation, and the attainment of financial inclusion. It appears that the proposed rule fails to recognize the transformative force of digital assets, particularly cryptocurrencies, and the opportunities they bring to the financial industry. Blockchain technology, the foundation of decentralized finance, allows individuals to transact and interact with financial instruments without the need for intermediaries. However, it appears that regulatory uncertainties are posing unnecessary challenges for the development of this nascent industry. One of my primary concerns lies with the unnecessary threat to my freedom to transact on the public blockchain without middleman or counterparty risk. Blockchain technology, characterized by its transparent, decentralized nature, enables users to access and transact with digital commodities using their private key. Unlike traditional financial systems, possession of digital commodities is not reliant on a centralized exchange but on individual access. I fail to understand why these decentralized financial commodities are being considered securities, as they clearly do not possess the characteristics traditionally associated with such assets. Furthermore, the recent lawsuits filed by the SEC against founders of decentralized finance projects have created an environment of fear and uncertainty among those who hold digital commodities. The excessive scrutiny and legal actions taken against participants in the decentralized finance space are detrimental to an industry that is still evolving and requires a balanced regulatory approach that fosters innovation and responsible growth. It is essential to acknowledge the unique qualities of decentralized finance and provide clarity to participants who are eager to contribute to this emerging sector. Blockchain technology is still in its infancy, and stifling growth through rigid regulations will only discourage developers from launching new and potentially groundbreaking solutions. It is evident that a more collaborative and adaptive regulatory framework is required, one that encourages responsible development while providing enhanced investor protections. As an enthusiastic advocate and user of decentralized finance technology, I am deeply disappointed by the lack of understanding and support demonstrated by the proposed rule. US citizens should be granted the freedom to transact on the blockchain without the looming threat of regulatory uncertainty. Providing a clear and supportive regulatory environment will allow decentralized finance to thrive, unlocking its full potential and enabling the benefits of financial innovation to reach a broader population. In conclusion, I strongly urge the Securities and Exchange Commission to reconsider the potential negative consequences that excessive regulation may have on decentralized finance. Rather than acting as a hindrance, I encourage the commission to engage in an open and constructive dialogue with the cryptocurrency community, striving for regulatory clarity and cooperation. By embracing the unique qualities of decentralized finance, the SEC can position the United States as a leader in this disruptive technology and reap the benefits of an inclusive and prosperous financial future. Thank you for considering my public comment. Should you require further clarification or additional information, please do not hesitate to reach out. I sincerely hope that the commission takes into account the concerns raised by those invested in decentralized finance and recognizes the importance of striking the right balance between investor protection and fostering innovation. Sincerely, Orlando