Oct. 30, 2023
Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Public Comment on Proposal "Safeguarding Advisory Client Assets" - File Number: [Insert File Number] To whom it may concern, I am writing this public comment in response to the proposal "Safeguarding Advisory Client Assets" by the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, there are several concerns and issues that need further clarification and consideration. Firstly, I would like to express my concerns regarding the lack of clarity on the definition of digital assets within the proposed rule. The rapidly evolving landscape of digital assets, particularly cryptocurrencies, introduces unique challenges that require precise and well-defined guidelines for investment advisers. Without clear guidance on what constitutes a digital asset, there is a risk of confusion and potential misinterpretation, which could hinder innovation and negatively impact investor protections. In the realm of digital assets, privacy concerns and the risk of identity theft become prominent on centralized exchanges. While these exchanges provide liquidity and facilitate trading, they also hold a considerable amount of sensitive user information, making them susceptible to hacking and data breaches. True decentralized finance (De-Fi) solutions, on the other hand, offer a safer alternative by eliminating the centralized point of failure that exists with traditional brokerage systems. These De-Fi platforms should not be subjected to the burdensome regulatory requirements imposed on custodial entities, as they inherently provide greater security for users' assets. Moreover, I believe that the SEC may be overreaching its authority in the crypto space. Experts and policymakers, such as Congressman Emmer, McHenry, and Davidson, have championed the cause of everyday Americans by advocating for clear and reasonable regulations that promote innovation while protecting investors. It is crucial for the SEC to strike a balance between facilitating growth in the cryptocurrency industry and ensuring investor protections without stifling innovation. I also want to bring attention to recent legal proceedings where judges have questioned the SEC's actions and adherence to the law. Judge Sarah Netburn's criticism of the SEC's "hypocrisy" and its lack of faithful allegiance to the law raises concerns about the agency's approach to regulating digital assets. Similarly, Judge Neomi Rao's characterization of the SEC's actions as "arbitrary and capricious" highlights the need for a transparent and fair regulatory framework that upholds the principles of justice. Furthermore, it is essential to recognize that certain digital assets, such as HEX, PulseChain, and PulseX, do not fall within the ambit of securities. These assets provide utility and functionality within their respective ecosystems, ensuring that individuals who hold these assets are not merely investors but active participants. It is imperative that the SEC acknowledges the distinction between securities and these types of assets to prevent undue regulatory burdens on legitimate projects. In conclusion, I urge the SEC to consider the concerns raised regarding the lack of clarity on the definition of digital assets and the potential risks of privacy and identity theft on centralized exchanges. The agency must also exercise caution and avoid overreach in the crypto space to foster innovation while protecting investors. I trust that the SEC will take into account the criticisms raised by respected judges and engage in a thorough examination of the legal underpinnings of various digital assets to ensure fair and effective regulations. Thank you for considering my comments. I appreciate the opportunity to contribute to this important discussion. Kindly, Anonymous