Oct. 27, 2023
Dear Securities and Exchange Commission, I am writing to submit my public comment on the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the SEC's effort to enhance investor protections and address gaps in the custody rule, I have several concerns regarding the scope and potential consequences of the proposed rule. Firstly, I believe there is insufficient consideration of multi-signature wallets as a secure custody solution for digital assets. The proposed rules do not adequately account for the use of multi-signature wallets, which have gained significant traction in the digital asset space for their enhanced security measures. By not acknowledging the viability of multi-signature wallets, the SEC risks hindering the adoption and innovation of digital asset custody solutions. I urge the SEC to reassess and incorporate appropriate provisions for the use of multi-signature wallets in the final rule. Furthermore, I am deeply concerned about the potential risks associated with the collection and storage of user information under the proposed regulations. The requirement for participants in decentralized finance (DeFi) to collect user information raises serious privacy and security concerns. Storing sensitive taxpayer information without proper safeguards increases the risk of identity theft and fraud. Additionally, the regulation may unintentionally create enticing targets for malicious actors under the guise of tax reporting. It is critical that the SEC evaluates the potential vulnerabilities and implements robust measures to safeguard user information and prevent identity theft. Moreover, I would like to highlight the need for a comprehensive assessment of the cumulative effects of multiple rules or events, particularly during periods of economic volatility or crisis. While each rule may individually aim to address specific concerns, a lack of coordination and consideration for the broader systemic implications can have unintended consequences. It is crucial that regulators prioritize longer-term risks and thoroughly evaluate the potential knock-on effects of each rule, ensuring they do not exacerbate broader systemic problems. Balancing short-term considerations with longer-term risks will be essential to maintaining overall stability within the financial sector and the economy as a whole. In conclusion, as the SEC finalizes the "Safeguarding Advisory Client Assets" rule, I urge you to seriously consider the issues I have presented. By incorporating appropriate provisions for multi-signature wallets, addressing the privacy and security risks associated with user information collection, and undertaking a comprehensive assessment of cumulative effects, the SEC can strengthen investor protections and foster a more resilient financial system. Thank you for considering my comments. I appreciate the opportunity to contribute to this important regulatory process. Sincerely, The People