Oct. 30, 2023
Isah Johnson Arome Securities and Exchange Commission 100 F Street NE Washington, DC 20549 Subject: Public Comment on Proposed Rule "Safeguarding Advisory Client Assets" (File No. [Insert File No.]) Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" , which seeks to enhance investor protections and address gaps in the custody rule for investment advisers. While I acknowledge the need for investor safeguards, I am concerned that certain aspects of the proposed rule may have a negative impact on the decentralized finance (DeFi) industry, particularly in relation to digital assets or cryptocurrencies, thereby limiting innovation and potential financial inclusion. The proposed rule encompasses a broad range of investments, including digital assets or cryptocurrencies, which have emerged as a transformative force in the financial industry. They possess the potential to enhance efficiency, transparency, and financial accessibility. However, the regulatory uncertainties surrounding digital assets have posed significant challenges for their widespread adoption and utilization. By implementing the proposed rule without considering the unique characteristics and complexities of digital assets, there is a risk of stifling innovation and hindering the growth of decentralized finance projects. The DeFi ecosystem thrives on experimentation, adaptability, and open access, enabling users to participate in decentralized lending, borrowing, and investment platforms without relying on traditional financial intermediaries. While it is essential to ensure the protection of client assets and mitigate the associated risks, it is equally important to avoid a regulatory approach that hampers technological advancements. I urge the Securities and Exchange Commission to carefully consider the potential negative implications of the proposed rule on the progress of decentralized finance and explore alternative frameworks that strike a balance between investor protection and the fostering of innovation. Furthermore, a collaborative approach involving industry stakeholders would prove instrumental in developing effective regulatory measures for digital assets. It is crucial to engage with representatives from DeFi projects, digital asset exchanges, and industry experts to gain comprehensive insights and formulate rules that are up-to-date, adaptive, and conducive to the growth of this burgeoning sector. In conclusion, while the proposed rule for safeguarding advisory client assets is well-intentioned, it is vital to address the potential negative impact on the decentralized finance industry, particularly in relation to digital assets. By adopting a collaborative approach and carefully considering the unique characteristics and challenges posed by digital assets, the Securities and Exchange Commission can support innovation, foster financial inclusion, and protect investor interests. Thank you for considering my comments on this matter. I trust that the Securities and Exchange Commission will take all the feedback into account as it finalizes the rule amendments. Should you require any further information or clarification, please do not hesitate to contact me. Sincerely, Isah Johnson Arome Sent from Yahoo Mail – master your inbox, anywhere