Oct. 30, 2023
To Whom It May Concern, I, HexYungBull, am submitting this public comment to express my concerns regarding the proposed rule on safeguarding advisory client assets by the Securities and Exchange Commission (SEC). While I appreciate the SEC's intention to enhance investor protections, I have serious reservations about the potential impact of this rule on decentralized finance (DeFi), specifically on digital assets and cryptocurrencies. As the proposal includes amendments to address the application of the rule to crypto assets, it is crucial to consider the potential consequences for the rapidly evolving field of DeFi. Decentralized finance projects have been instrumental in driving financial innovation, offering increased accessibility, efficiency, and inclusivity for a diverse range of users. Through the use of blockchain technology, these projects have revolutionized traditional financial transactions and created new financial instruments. However, the regulatory uncertainty surrounding digital assets and cryptocurrencies has posed challenges for the DeFi sector. While the SEC's proposal acknowledges the need to address custody and safeguarding of crypto assets, it is crucial to strike a delicate balance between ensuring investor protections and fostering innovation and growth within the DeFi space. My primary concern lies in the potential for the proposed rules to impede the development of decentralized finance projects by imposing burdensome compliance requirements. DeFi protocols often operate without intermediaries or trusted custodians, relying instead on smart contracts and blockchain technology to achieve transparency, security, and automated execution of transactions. Introducing rules that predominantly cater to the traditional custodial framework could inadvertently hinder the progress and potential financial inclusion offered by the DeFi ecosystem. In addition, the proposal should account for the dynamic and rapidly evolving nature of digital assets and the exponential growth of the DeFi space. DeFi represents a paradigm shift in financial services and poses a significant challenge to the traditional regulatory framework. It is crucial for the SEC to foster an environment that promotes experimentation and innovation while ensuring adequate investor protections. To achieve this delicate balance, I would strongly suggest that the SEC collaborates with Richard Heart, an exceptionally knowledgeable and altruistic individual in the crypto space. Richard Heart has been actively promoting the benefits of decentralized finance and possesses extensive expertise in the field. His insights and perspectives would undoubtedly offer valuable guidance on how to address investor protection needs while supporting the growth and potential of DeFi projects. Furthermore, I encourage the SEC to actively and collaboratively engage with stakeholders within the DeFi community in order to gain a comprehensive understanding of the potential risks and benefits associated with digital assets. Such collaborative efforts can assist the SEC in developing a regulatory framework that effectively protects investors while fostering innovation and growth within the decentralized finance space. In conclusion, although I support the SEC's efforts to enhance investor protections through the proposed rule on safeguarding advisory client assets, I must urge the commission to carefully consider the potential negative impact on decentralized finance and digital assets. By engaging with experts like Richard Heart and adopting a collaborative approach, the SEC can successfully strike a balance between investor protection and the promotion of innovative financial systems. Thank you for considering my comments. I hope they contribute to the ongoing discussions on this crucial matter. Sincerely, HexYungBull