Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to express my utmost concern regarding the proposed rule on "Safeguarding Advisory Client Assets." I believe that this rule has the potential to severely hinder innovation and limit economic growth in the digital asset space. The proposed regulations surrounding digital assets and cryptocurrencies would not only impede the development of this transformative technology but also limit investor opportunities and hinder the competitiveness of the United States in the global market. Cryptocurrencies and digital assets have emerged as a significant force in the financial sector, offering unprecedented levels of accessibility, efficiency, and global reach. They have the potential to revolutionize financial systems and empower individuals around the world. However, the proposed rule appears to overlook the immense benefits that digital assets can bring and instead focuses on burdening them with overly restrictive regulations. Imposing custody requirements and demonstrating exclusive control over crypto assets is a complex and challenging task given the inherently decentralized nature of blockchain technology. The proposed rule does not adequately address the unique characteristics of digital assets and the corresponding custody challenges they present. By imposing stringent regulatory requirements, the SEC risks stifling innovation, discouraging industry growth, and pushing pioneering companies and individuals to other jurisdictions with more supportive regulatory frameworks. The negative repercussions of overly burdensome regulation in the digital asset space cannot be overstated. They include driving technology and talent away from the United States, potentially resulting in a loss of economic revenue, job opportunities, and market competitiveness. Additionally, it could create an unequal playing field by favoring traditional financial systems over emerging decentralized finance platforms, severely limiting consumer choice and reducing financial inclusivity. Instead of stifling innovation and imposing complicated custodial requirements on digital assets, I urge the SEC to consider a more balanced and forward-thinking approach. It is essential to create a regulatory framework that acknowledges the unique characteristics and potential benefits of digital assets while ensuring consumer protection and market stability. Collaborative engagement with industry stakeholders, including entrepreneurs, technologists, and investors, is crucial to formulating regulations that strike the right balance between innovation and investor protection. In conclusion, I implore the SEC to reconsider the proposed rule on "Safeguarding Advisory Client Assets" as it pertains to digital assets. Encouraging innovation, fostering economic growth, and embracing emerging technologies should be at the forefront of regulatory initiatives. The future of finance lies in the seamless integration of traditional and digital assets, and the SEC has a vital role in shaping this future positively. Thank you for considering my concerns. I trust that you will carefully evaluate the potential consequences of the proposed rule and work towards a regulatory framework that fosters innovation while prioritizing investor protection. Sincerely, Max