Oct. 22, 2023
Hello, I am responding to the proposed rule "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, I have some concerns regarding the inadequate consideration of the unique properties of cryptocurrency. Digital assets, such as cryptocurrency, have emerged as transformative financial instruments built on blockchain technology. However, the decentralized nature and technological complexities of cryptocurrencies make them fundamentally different from traditional forms of assets. It is crucial that any regulatory framework designed around these assets recognizes and accounts for their unique attributes. One of my primary concerns is that the SEC fails to consider the distinction between cryptocurrencies that are genuinely decentralized and those that may exhibit established security-like characteristics. If a cryptocurrency is genuinely decentralized, it serves as a decentralized community “asset" rather than a security under traditional definitions. By not distinguishing between the two, the SEC risks applying impractical regulatory requirements that stifle innovation and deter legitimate businesses from operating within the United States. Furthermore, it is evident that the SEC's understanding of the technology underlying cryptocurrencies is limited. Blockchain technology presents a paradigm shift in the financial landscape, allowing for permissionless innovation, immutability, and enhanced security. It is essential that any regulatory framework accurately reflects the capabilities and intricacies of this technology, promoting innovation rather than inhibiting it. Imposing stringent regulatory requirements without a comprehensive understanding of the unique properties of cryptocurrencies will only serve to push innovation overseas. In a globalized and interconnected world, stifling domestic innovation will place the United States at a competitive disadvantage, potentially jeopardizing its position as a leader in technological advancements. In conclusion, I would like the SEC to reconsider its approach to regulating cryptocurrencies. A comprehensive understanding of the decentralized nature and technological complexities of these assets is crucial before enacting any regulatory requirements. I encourage the SEC to conduct thorough research and consultation with industry experts to create a regulatory framework that fosters innovation, protects investors, and maintains the United States' leadership in the global financial industry. Thank you for your attention to this matter. Sincerely, Rene Gonzalez