Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns about the "Safeguarding Advisory Client Assets" proposal and its potential impact on the development and adoption of tokenized debt instruments. While I appreciate the SEC's effort to enhance investor protections and address gaps in the custody rule, it is crucial to adequately consider the unique characteristics of tokenized debt instruments to avoid hindering their growth in the market. One specific issue I have is the inadequate consideration of tokenized debt instruments within the proposed regulations. The terms used in the proposal, such as "platform," "software," and "ledger," are poorly defined and open to various interpretations. This lack of clarity may lead to confusion and uncertainty among market participants, potentially stifling their ability to fully understand and comply with the new requirements. Furthermore, the definition of terms like "wallet" and "validator" does not align with their technical meaning. This discrepancy may further contribute to confusion and hinder the widespread adoption of tokenized debt instruments within the advisory industry. It is essential to ensure that the language used in the regulations accurately reflects the technical aspects of these instruments to promote clarity and facilitate compliance. To address these concerns, I urge the SEC to provide comprehensive and precise definitions for terms related to tokenized debt instruments in the final rule. Clear guidelines will enable market participants to understand and comply with the regulations effectively, thus fostering innovation and growth within the tokenized debt instrument market. In conclusion, I appreciate the SEC's efforts to enhance investor protection through the "Safeguarding Advisory Client Assets" proposal. However, I urge the commission to consider the unique characteristics of tokenized debt instruments and provide clearer definitions for critical terms to mitigate confusion and foster industry growth. By striking the right balance between investor protection and innovation, we can create a regulatory framework that promotes the development and adoption of tokenized debt instruments while maintaining robust safeguards. Thank you for considering my comments. Sincerely, Aaron Theodore