Oct. 22, 2023
Dear SEC , Gary Gensler and whom ever else this may concern: I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets" and its potential negative impact on decentralized finance (DeFi) projects and small businesses. While it is important to enhance investor protections, it is also crucial to consider the implications of these regulations on innovation and financial inclusion. Firstly, the proposed rules may hinder the growth and development of decentralized finance projects, limiting innovation and potential financial inclusion. DeFi has emerged as an important alternative to traditional financial systems, allowing for peer-to-peer transactions, smart contracts, and decentralized applications. By imposing onerous reporting requirements and compliance costs, the proposed rules could discourage entrepreneurs and small teams from entering the DeFi space, restricting competition and limiting access to decentralized financial services for individuals around the world. Furthermore, the reporting requirements in the proposed rule will require small businesses and start-up protocols, which would not otherwise be required to track personal identifiable information, to implement such tracking. This will cause an additional burden and expense to these businesses. These additional costs will put these projects at a disadvantage and could stifle innovation, preventing them from effectively competing with larger and more established financial institutions. It is important to strike a balance between investor protections and promoting a dynamic and inclusive financial system. There should be consideration for alternative approaches that provide necessary safeguards while minimizing the compliance burden for small businesses and DeFi projects. This can be achieved through targeted regulations and closer collaboration with innovators in the DeFi space. In conclusion, while investor protection is a crucial aspect of any regulatory framework, it is imperative to consider the potential negative impact on decentralized finance projects and small businesses. It is essential to foster an environment that encourages innovation, competition, and financial inclusion. I encourage the Securities and Exchange Commission to carefully evaluate the proposed rules and seek input from stakeholders in the DeFi community and small business owners to ensure that the regulations strike the right balance. Thank you for considering my comments. Sincerely, Piotr Dabrowski