Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the aim of enhancing investor protections and addressing gaps in the custody rule, I have concerns regarding a few aspects of the proposed rule that require further attention and consideration. One issue that stands out to me is the insufficient consideration of global regulatory standards, particularly in relation to digital assets. The proposed rule does not align with international regulatory standards for digital assets, leading to potential fragmentation in the market and hindering cross-border transactions. In an increasingly interconnected global financial landscape, it is imperative to promote harmonization and coordination among regulatory bodies to ensure the efficient and secure functioning of markets. The Securities and Exchange Commission should collaborate with international counterparts and take into account global best practices when formulating regulations regarding digital assets. Furthermore, I find certain aspects of the proposed regulations to be confusing and potentially burdensome, particularly regarding decentralized finance (DeFi) transactions. DeFi is a rapidly evolving industry, and the proposed reporting requirements for various participants in DeFi may result in multiple inconsistent reports for the same transaction. This complexity could pose challenges for market participants and potentially deter innovation. It is crucial for the Securities and Exchange Commission to engage with industry experts and stakeholders to develop clear and effective regulatory frameworks for emerging technologies like DeFi, ensuring that the regulations strike a balance between investor protections and fostering innovation. In addition to the concerns mentioned above, I believe it is essential to prioritize the protection of citizens' rights throughout the rulemaking process. Any regulatory framework should carefully consider and balance the interests of investors, while also safeguarding individual rights such as privacy and due process. The proposed rule should explicitly address how it upholds citizens' rights throughout the implementation and enforcement processes. It is important to strike a balance between robust investor protections and preserving fundamental rights. In conclusion, I urge the Securities and Exchange Commission to address the concerns raised regarding the alignment with global regulatory standards for digital assets, the potential burden on the DeFi industry, and the protection of citizens' rights. By incorporating feedback and taking into account these significant considerations, the rule can be refined to better serve the interests of investors and support a thriving, innovative, and fair financial ecosystem. Thank you for your attention to these matters. Sincerely, Jacob Simpkins