Oct. 30, 2023
I am writing to comment on the proposed rule for safeguarding advisory client assets (File No. S7-04-23), specifically asking the Commission to take great care not to hinder innovation and access in the cryptocurrency market through overly rigid requirements. While protecting advisory clients is crucially important, imposing custodial and disclosure rules without adjusting for the unique nature of decentralized digital assets could improperly cutoff many everyday American investors from participating in and benefitting from the growing crypto economy. Innovations like the Uniswap decentralized trading protocol allow more open and democratic crypto trading by connecting buyers and sellers directly through smart contracts rather than through intermediaries. But strictly applying the proposed enhancements to asset safeguarding developed for traditional finance could force investment advisers to prohibit clients from using pioneering platforms like Uniswap. I ask that the Commission write this rule in a way that empowers investment advisers to evaluate and utilize revolutionary new open crypto protocols like Uniswap judiciously, enabling clients to participate in decentralized finance with proper disclosures tailored to the unique risks and mechanics. A balanced regulatory approach can foster innovation benefiting ordinary investors while still safeguarding their interests. Thank you for considering this perspective and crafting rules that expand, rather than restrict, financial opportunities. Sincerely, Nicholas Elstran Sent with Proton Mail secure email.