Oct. 29, 2023
Dear Sir/Madam, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" by the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have several concerns regarding the scope of the rule and its potential impact on privacy and the development of decentralized autonomous organizations (DAOs). Firstly, I would like to express my concern that the proposed rule does not adequately consider the unique characteristics and challenges posed by decentralized autonomous organizations. DAOs, which operate on decentralized blockchains, have emerged as innovative models for economic organization and governance. However, the rule seems to overlook the need for specific adaptations or exceptions that would allow for the proper safeguarding of assets within decentralized systems. Without clear guidance on how to address the unique aspects of DAOs, such as the absence of a central custodian, it could hinder their development and impede potential benefits they could bring to the market. Additionally, I would like to raise a broader concern regarding privacy and the safety of sensitive financial data. The proposed rule requires investment advisers to provide clients' custodian information, including account numbers, which would be shared with multiple third parties. While I understand the necessity for oversight and protection of client assets, the potential risks associated with a large number of entities having access to sensitive financial information and social security numbers should be adequately addressed. Striking a balance between investor protections and maintaining the privacy and safety of personal information is crucial in safeguarding clients' interests. Moreover, I would like to voice my disappointment over what appears to be a disregard for understanding decentralized blockchains on the part of the SEC. I believe that emerging technologies such as blockchain have the potential to revolutionize the financial industry with increased efficiency, transparency, and security. However, it is disheartening to see that the proposed rule does not seem to appropriately incorporate or account for these advancements. A more thorough understanding of decentralized systems and their potential benefits is necessary to ensure that regulatory frameworks support rather than stifle innovation in the industry. In conclusion, I urge the SEC to further examine and address the concerns I have raised regarding the proposed rule on "Safeguarding Advisory Client Assets". Specifically, I recommend a comprehensive evaluation of the impact of the rule on privacy, the consideration of reasonable adaptations to accommodate decentralized autonomous organizations, and a deeper understanding of emerging blockchain technologies. It is essential to strike a balance between investor protections and the fostering of innovation and development in the financial industry. Please take into consideration my concerns and suggestions in your decision-making process. Thank you for considering my public comment.