Oct. 30, 2023
Dear SEC, I am writing to express my concerns regarding the proposed rule on Safeguarding Advisory Client Assets. While I commend the SEC's efforts to enhance investor protections and address gaps in the custody rule, there are certain aspects of the proposal that require further clarity and consideration. Specifically, I am concerned about the lack of clarity in the definition of digital assets. In today's rapidly evolving financial landscape, digital assets, especially cryptocurrencies, are playing an increasingly significant role in investment portfolios. However, the proposal fails to provide clear guidance on what qualifies as a digital asset, leading to confusion and potential misinterpretation. Furthermore, I am troubled by the privacy concerns and identity theft risks associated with centralized exchanges. The proposal does not adequately address these issues, which are of utmost importance when dealing with digital assets. True decentralized finance (De-Fi) platforms provide a safer alternative, as they eliminate the reliance on intermediaries and reduce the risk of brokers losing all user information. Additionally, it is disconcerting to witness what many perceive as overreach by the SEC in the crypto space. Congressman Emmer, McHenry, and Davidson have been vocal in their support for everyday Americans in navigating the complexities of this emerging market. Moreover, Judge Netburn called out the agency's "hypocrisy" in its approach, while Judge Neomi Rao criticized the SEC's actions as "arbitrary and capricious." In conclusion, I urge the SEC to address these concerns and provide further clarification on the definition of digital assets. Additionally, I encourage the agency to prioritize privacy and security measures in the proposed rule, specifically focusing on the risks associated with centralized exchanges. It is crucial that the SEC maintains a faithful allegiance to the law, embraces the potential of digital assets, and ensures a regulatory framework that fosters innovation while protecting investors. Thank you for considering my comments. I appreciate the opportunity to provide input on this important matter. Sincerely, Scott L