Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on your proposal, "Safeguarding Advisory Client Assets," which aims to enhance investor protections and address gaps in the custody rule. While I very much appreciate the intentions behind this rule, I have some concerns regarding the scope of the rule, the protection of client assets, and the potential impact on privacy and safety. First and foremost, I believe that the SEC has not adequately considered the unique properties of cryptocurrency in its proposed rule. Cryptocurrency operates on a decentralized network, which poses technological complexities and challenges when it comes to demonstrating exclusive control. The current regulatory requirements fail to account for these complexities and may lead to impractical and burdensome compliance standards for investment advisers dealing with cryptocurrency assets. It is essential for the SEC to engage with experts in the cryptocurrency industry and gain a thorough understanding of its decentralized nature before implementing regulations that could stifle innovation. Furthermore, I am deeply concerned about the potential privacy and safety risks associated with this proposed rule. By requiring investment advisers to disclose sensitive financial data and social security numbers to numerous third parties, there is an increased likelihood of unauthorized access and potential data breaches. This could leave investors vulnerable to identity theft and other cybercrimes. The SEC must prioritize the protection of investors' personal information and take measures to ensure that robust privacy safeguards are in place. Moreover, I believe that the SEC needs to have a more comprehensive understanding of decentralized finance (DeFi) and its complexities before regulating it. Due to its rapidly evolving nature, DeFi presents unique challenges that require a nuanced approach. Creating rules for something that is still evolving and not fully understood could hinder innovation and disrupt the potential benefits of DeFi. It is crucial for the SEC to engage with industry experts and stakeholders to gain a deeper understanding of DeFi and its role in the future of finance before implementing any regulations. In conclusion, I kindly ask the SEC to reconsider certain aspects of the proposed rule, specifically in relation to the regulation of cryptocurrency assets, the protection of privacy and safety, and the understanding of decentralized finance. It is imperative that the SEC works collaboratively with industry experts to gain an in-depth understanding of these complex areas and ensure that any resulting regulations strike a balance between investor protection and fostering innovation. Thank you for taking the time to read my public comment. Sincerely, D. Miler