Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule titled "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have several concerns about the potential negative impact of these rule proposals, particularly in the areas of decentralized finance (DeFi) and the impact abroad. First and foremost, I am concerned about the potential negative impact on decentralized finance (DeFi) projects. The proposed rules may hinder the growth and development of decentralized finance, limiting innovation and potential financial inclusion. Given the rapid growth and global nature of DeFi, it is essential to consider the unique characteristics of decentralized systems when implementing regulatory frameworks. The SEC should work toward fostering an environment that encourages responsible innovation in this space, while still maintaining investor protection. Furthermore, the proposed rule does not sufficiently limit reporting requirements for protocols run outside the United States and for users outside the country. The global nature of financial markets requires regulators to balance investor protection with the need to avoid overregulation that could stifle innovation and hinder international cooperation. It is crucial to ensure that the proposed rule does not inadvertently discourage international participation or create unnecessary barriers for market participants outside the United States. In addition to these specific concerns, I also want to emphasize the importance of considering the rule's impact on the media. Freedom of speech and press are cornerstones of democracy, and it is necessary to highlight the potential impacts of a proposed rule on journalists and news organizations. Regulators must consider the potential impacts of their rules on the media and take steps to ensure that they promote a robust and independent press that holds power accountable and serves the public interest. This consideration is particularly relevant in today's digital age, where the media landscape is rapidly evolving. In conclusion, while I support the SEC's goal of enhancing investor protections and addressing gaps in the custody rule, I urge the Commission to carefully consider the potential negative impact of these rule proposals on decentralized finance and international participation. Additionally, the SEC should take into account the potential impact on media freedom and advocate for a regulatory framework that promotes responsible innovation while protecting investor rights. Thank you for considering my comments and the concerns raised. I appreciate the SEC's commitment to engaging with the public and seeking input on proposed rules. If there are any further opportunities to provide input or clarify my concerns, please do not hesitate to let me know. Sincerely, Dennis Peiter