Oct. 30, 2023
Dear Sir/Madam, I am writing to express my concerns regarding the proposed rule, "Safeguarding Advisory Client Assets," from the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I believe that there are certain issues that need to be addressed in a more nuanced manner. One of my concerns pertains to the inconsistent regulatory treatment of decentralized exchanges. The proposed rules do not provide a clear and consistent regulatory framework for these exchanges, creating uncertainty and the potential for regulatory arbitrage. As digital assets, such as cryptocurrencies, gain prominence and transform the financial landscape, it is crucial to provide a stable and consistent regulatory environment to foster innovation and protect investors. I urge the SEC to reconsider its approach and align the regulatory treatment of decentralized exchanges with their centralized counterparts. Furthermore, I believe that the SEC should exercise caution when asserting authority over decentralized exchanges. While risks undoubtedly exist in the crypto space, it is important to recognize the unique nature of decentralized exchanges and not stifle innovation unnecessarily. Rather than imposing stringent regulations, I propose that the SEC focus on educating investors and market participants about the potential risks and rewards of engaging with decentralized exchanges. By promoting education and awareness, the SEC can empower investors to make informed decisions while allowing for the continued development of this burgeoning technology. In addition to these concerns, I would like to address the proposed amendments related to digital assets or cryptocurrencies. As the popularity of these assets continues to grow, it is crucial to establish clear guidelines and regulations that address the unique nature of digital assets. While I understand the need to safeguard investor assets, it is important for the SEC to strike a balance between protecting investors and fostering innovation. Therefore, I propose that the SEC adopts a principles-based approach when regulating digital assets. A one-size-fits-all approach could stifle innovation and hinder technological advancements in the financial sector. By allowing for flexibility and adaptability in regulatory frameworks, the SEC can effectively address potential risks while facilitating the growth and development of digital assets. In conclusion, I appreciate the SEC's intention to enhance investor protections and improve the custody rule. However, I believe that there are areas within the proposed rule that require further consideration and refinement. By addressing the issues of inconsistent regulatory treatment and taking a principles-based approach to digital assets, the SEC can create a regulatory environment that encourages innovation and protects investors. Thank you for considering my concerns. I hope that my comments will contribute to a fruitful discussion on this important matter. Sincerely, Guarin Adebayo