Subject: S7-04-23: Webform Comments from Jack Levitt
From: Jack Levitt
Affiliation:

Oct. 30, 2023

Dear Securities and Exchange Commission,

I am writing to express my concerns regarding the proposed rule for
safeguarding advisory client assets, specifically in relation to the
lack of clarity on the definition of digital assets.

Digital assets, such as cryptocurrencies, have emerged as a
transformative force in the financial industry, leveraging blockchain
technology to revolutionize the way we transact and store value.
However, the regulatory landscape surrounding these assets remains
complex and uncertain.

The proposed rule should provide clear guidance on what constitutes a
digital asset, taking into consideration the unique characteristics
and functionalities of this rapidly evolving asset class. Without a
clear definition, there is a risk of misinterpretation and confusion
among investment advisers, potentially leading to unintended
consequences and hindering innovation.

For instance, the digital assets HEX, PulseChain, and PulseX should
not be considered securities and thus should not fall under the scope
of the proposed rule. These assets are part of the decentralized
finance (DeFi) ecosystem, offering independent and autonomous
financial services without intermediaries. Applying the proposed rule
to these assets would only stifle innovation and restrict access to
innovative financial solutions for investors.

Therefore, it is crucial that the Securities and Exchange Commission
provides clear and comprehensive guidance on the definition of digital
assets, taking into account their unique characteristics and use
cases. This will ensure that investment advisers can navigate the
regulatory framework effectively, provide appropriate safeguards for
client assets, and foster continued innovation in the digital asset
space.

Thank you for considering my concerns. I strongly urge you to address
the lack of clarity surrounding the definition of digital assets in
the final rule. This will not only provide regulatory certainty but
also pave the way for the growth and development of the digital asset
industry, contributing to the overall advancement of the financial
sector.

Sincerely,

Jack Levitt