Oct. 29, 2023
Dear Sir/Madam, I am writing to provide my comment on the proposed rule regarding the safeguarding of advisory client assets, as outlined in the Safeguarding Advisory Client Assets Proposal. While I appreciate the Securities and Exchange Commission's (SEC) efforts to enhance investor protections and address gaps in the custody rule, I have significant concerns regarding certain aspects of the proposed regulations. One specific area that gives me pause is the potential negative impact on blockchain innovation. The proposed rules may inadvertently stifle the growth and development of blockchain technology by imposing excessive regulatory burdens and impeding the progress of decentralized solutions. As we have seen, blockchain holds tremendous potential to revolutionize various industries, including finance, by providing increased security, transparency, and efficiency. One of my primary concerns is the poorly defined terms used in the regulations. The proposed rules introduce terms like "platform," "software," and "ledger," all of which are susceptible to numerous interpretations. Meanwhile, terms such as "wallet" and "validator" are defined in ways that do not accurately describe their technical meaning. This lack of clarity and precision will undoubtedly lead to confusion and inconsistencies in compliance efforts. To foster blockchain innovation, it is crucial to provide clear definitions that align with established technical standards. This would help ensure that regulatory requirements are not overly burdensome and are tailored to the unique characteristics and capabilities of blockchain technologies. Furthermore, the proposed rules need to be more flexible and adaptable to accommodate the fast-paced nature of blockchain innovation. Imposing rigid and prescriptive regulations could hinder experimentation and limit the advancements that blockchain can bring to the financial ecosystem. Instead, regulators should focus on promoting and supporting innovation while concurrently addressing any inherent risks. In conclusion, while I support the objectives of enhancing investor protections and addressing gaps in the custody rule, I urge the SEC to reconsider certain aspects of the proposed regulations. Specifically, the SEC must carefully consider how the rules may impact blockchain innovation and ensure that definitions and requirements are congruent with the underlying technology. By striking the right balance between regulation and innovation, we can facilitate the growth of blockchain solutions while maintaining investor safeguards. Thank you for considering my comments and taking into account the potential impact on blockchain technology. I believe that by promoting an environment that fosters both innovation and investor protection, we can achieve a stronger financial ecosystem for all. Sincerely Bill Rodriguez