Oct. 30, 2023
Dear Chairman Gensler and Commissioners, I am writing 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 would like to express my reservations regarding certain aspects of the proposed rule. It is crucial to strike a balance between safeguarding client assets and maintaining the competitiveness of the US financial industry. Firstly, my concern lies with the potential negative impact on the competitiveness of US companies. While it is essential to enhance investor protections, I am worried that the proposed rule may impose burdensome reporting requirements on different participants in decentralized finance (DeFi). This could cause multiple, inconsistent reports to be generated for the same transaction. Such complexities may dissuade market participants and put US companies at a disadvantage compared to their international counterparts. It is worth considering the uniqueness of DeFi and the innovative nature of the technology in question. DeFi operates on the principles of decentralization and autonomy, enabling self-executing smart contracts without intermediaries. Imposing extensive reporting requirements on participants in this space could stifle its growth and hinder the competitiveness of US DeFi companies. Therefore, it is crucial for the SEC to carefully consider the specific dynamics of DeFi and develop rules that appropriately address investor protections without unduly burdening market participants. Additionally, I am concerned that the proposed regulations may lead to unintended consequences such as capital flight and loss of market share for US companies. The nature of financial innovation and global markets necessitates a comprehensive understanding of international regulatory frameworks. We must ensure that the proposed rules align with global standards to prevent potential disadvantages for US companies operating in international markets. Striking a balance between investor protection and global competitiveness is essential for the continued growth and vitality of the US financial industry. Moreover, I believe it is essential for the SEC to solicit feedback and engage in dialogue with market participants experienced in DeFi. This will ensure a comprehensive understanding of the intricacies and potential challenges faced by the industry. Actively involving relevant stakeholders will lead to more informed decision-making and the development of effective regulations that adequately address investor protection concerns while also fostering a competitive environment for US companies. In conclusion, I urge the SEC to consider the potential negative impact on the competitiveness of US companies as it proceeds with the proposed rule "Safeguarding Advisory Client Assets." It is imperative that the SEC finds a balanced approach that enhances investor protections while simultaneously fostering innovation and competitiveness in the financial industry. Engaging with market participants and addressing the nuanced concerns of DeFi will be vital in formulating effective regulations. Thank you for considering my comments on this important matter. I appreciate the SEC's dedication to investor protections and market integrity, and I trust that the Commission will carefully consider the concerns raised by various stakeholders as it finalizes the rulemaking process. Sincerely, Steven Terry