Oct. 14, 2023
Dear Sir/Madam, I hope this message finds you well. I write to you today as an engaged and concerned member of the cryptocurrency and digital asset community in Canada, with a strong desire to express my opposition to the proposal titled "Safeguarding Advisory Client Assets; Reopening of Comment Period" presented by the Securities and Exchange Commission (SEC). While I deeply respect the need for investor protection within our financial landscape, I firmly believe that the SEC's attempt to regulate the dynamic world of cryptocurrency and digital assets may extend beyond the boundaries of necessity. First and foremost, it is crucial to appreciate that cryptocurrencies and digital assets function within a unique and swiftly evolving technological domain. The existing legal and regulatory structures were predominantly conceived for traditional financial instruments and may not seamlessly apply to these innovative forms of assets. Therefore, I earnestly request that regulators like the SEC proceed with prudence in this realm, ensuring that they do not inadvertently stifle innovation through excessive regulatory constraints. It's important to recognize that the SEC already has existing regulatory frameworks designed to oversee the cryptocurrency and digital asset industry. For instance, the SEC has jurisdiction over securities offerings and has previously taken action against fraudulent initial coin offerings (ICOs). These established regulations offer a degree of investor protection without necessitating additional cumbersome requirements. Moreover, we must consider the potential unintended consequences of implementing strict regulations on the cryptocurrency and digital asset industry. Over-regulation could potentially drive innovation away from the United States to more crypto-friendly jurisdictions, resulting in a loss of economic opportunities and the departure of skilled individuals. It is vital for the SEC to strike a balance between protecting investors and fostering innovation within this emerging sector. Furthermore, the proposal seems to overlook the unique characteristics of cryptocurrencies and digital assets. Unlike traditional financial instruments, cryptocurrencies operate in a decentralized manner and are reliant on blockchain technology. This decentralized nature makes it challenging to apply conventional custody and safeguarding requirements. Imposing stringent custody rules could potentially hinder the development and adoption of cryptocurrencies, thereby limiting their potential benefits for investors and the broader economy. The SEC should also consider the potential impact on small businesses and startups in the cryptocurrency and digital asset space, especially in a country like Canada, where entrepreneurship and innovation are highly valued. These companies often operate with limited resources and may face difficulties complying with complex regulatory requirements. Excessive regulation could create barriers to entry, thus stifling competition and innovation within the industry. In closing, while ensuring investor protection is of paramount importance, I believe that the SEC's proposal titled "Safeguarding Advisory Client Assets; Reopening of Comment Period" may represent an overreach in the regulation of cryptocurrency and digital assets. The SEC should approach this industry with the necessary care, recognizing its unique characteristics, and nurturing innovation while safeguarding the interests of investors. Thank you for your consideration of this matter. Sincerely, David M. Sent with Proton Mail secure email.