Oct. 15, 2023
Dear Securities and Exchange Commission, I am writing as an individual deeply engaged in the cryptocurrency and digital asset space. I wish to communicate serious concerns about the proposed "Safeguarding Advisory Client Assets" regulation. While the underlying principles of investor protection and fraud prevention are commendable, the proposal's potential implications are worrisome. The regulation appears to expand the SEC's reach into cryptocurrencies and digital assets, and this could inadvertently suppress innovation and progression in a rapidly developing industry. Existing laws and regulations already govern cryptocurrencies and digital assets. The SEC has previously categorized specific cryptocurrencies as securities, placing them under the regulatory structures established by the Securities Act of 1933 and the Securities Exchange Act of 1934. By broadening this regulation to encompass all digital assets, the SEC risks imposing an excessive regulatory burden on the industry, which could potentially inhibit its growth and evolution. Moreover, the proposal seems to overlook the unique attributes of cryptocurrencies and digital assets. As decentralized entities powered by blockchain technology, these assets are fundamentally different from conventional securities. The application of stringent custody rules to digital assets could prove to be both unwieldy and counterproductive, obstructing the development of innovative custody solutions tailored for cryptocurrencies. Additionally, I am concerned about the unintended impact on individual investors. By enforcing strict custody requirements, the SEC could unintentionally deter investment in digital assets. This would deprive retail investors of the potential benefits and opportunities that this emerging asset class offers, thereby limiting their prospects for wealth creation and financial independence. I appeal to you to reassess the extent and context of the proposed regulation. It is vital to maintain a delicate balance between ensuring investor protection and enabling the continued growth and innovation of the cryptocurrency and digital asset industry. Thank you for considering this urgent matter. Yours sincerely, Paul Bugge