Oct. 30, 2023
Dear Chairman Gensler and Commissioners, I write to provide a public comment on the proposed rule "Safeguarding Advisory Client Assets" (Release No. IA-5653; File No. S7-09-20) by the Securities and Exchange Commission (SEC). As an individual deeply concerned about investor protections and the competitiveness of US companies, I wish to express my reservations regarding certain aspects of the proposed rule. Striking a balance between safeguarding client assets and maintaining the competitiveness of the US financial industry is paramount. First and foremost, my concern revolves around the potential adverse impact on the competitiveness of US companies. While enhancing investor protections is unquestionably vital, I am apprehensive that the proposed rule might impose onerous reporting requirements on participants in decentralized finance (DeFi). Such requirements may lead to the generation of multiple, inconsistent reports for the same transactions, potentially deterring market participants and placing US companies at a disadvantage compared to their international counterparts. It is imperative to recognize the distinctiveness of DeFi and the innovative technology it embodies. DeFi operates on principles of decentralization and autonomy, facilitating self-executing smart contracts without intermediaries. Imposing extensive reporting requirements on participants in this domain could stifle its growth and hinder the competitiveness of US DeFi companies. Therefore, I strongly urge the SEC to thoroughly contemplate the unique dynamics of DeFi and formulate rules that appropriately address investor protections without imposing undue burdens on market participants. Furthermore, I am apprehensive that the proposed regulations may inadvertently lead to consequences such as capital flight and a loss of market share for US companies. The evolving landscape of financial innovation and global markets demands a comprehensive understanding of international regulatory frameworks. It is essential that the proposed rules align with global standards to prevent potential disadvantages for US companies operating in international markets. Achieving a delicate equilibrium between investor protection and global competitiveness is indispensable for the ongoing growth and vitality of the US financial industry. Moreover, it is my firm belief that the SEC should proactively seek feedback and engage in constructive dialogue with DeFi market participants. This collaborative approach will foster a comprehensive understanding of the intricacies and potential challenges faced by the industry. Active engagement with relevant stakeholders will lead to more informed decision-making and the development of effective regulations that adequately address investor protection concerns while simultaneously nurturing a competitive environment for US companies. In conclusion, I respectfully implore the SEC to take into account the potential negative impact on the competitiveness of US companies as it advances with the proposed rule "Safeguarding Advisory Client Assets." It is of utmost importance that the SEC adopts a balanced approach that enhances investor protections while also promoting innovation and competitiveness in the financial industry. Engaging with market participants and addressing the nuanced concerns of DeFi will be instrumental in formulating effective regulations. I extend my gratitude for considering my comments on this critical matter. I hold in high regard the SEC's unwavering commitment to investor protections and market integrity, and I trust that the Commission will give due consideration to the concerns raised by various stakeholders as it finalizes the rulemaking process. Sincerely,