Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections, there are some key areas of the proposal that require further consideration. Specifically, I feel that the SEC has not adequately taken into account the unique properties of cryptocurrency and the technological complexities associated with it. As digital assets, such as cryptocurrency, continue to gain prominence in the financial sector, it is crucial to develop regulations that ensure investor protection without stifling innovation. However, the current proposal seems to overlook the decentralized nature of cryptocurrency and fails to provide practical regulatory requirements. One issue that stands out is the poorly defined terms used in the proposed rule. The SEC's inability to clearly define these terms undermines regulatory clarity and could lead to unintended consequences. To ensure effective and enforceable regulations, it is essential for the SEC to provide precise definitions that address the specific characteristics of digital assets. Furthermore, the proposed rule's excessive focus on the exclusive control of cryptocurrency assets fails to recognize the unique features of blockchain technology. Blockchain operates on a decentralized network, where control over assets is distributed among multiple participants. Requiring centralized control over cryptocurrency assets neglects the foundational principles of the technology and imposes unreasonable burdens on investment advisers. Additionally, the proposal's requirement for written agreements and verification for exceptions related to cryptocurrency assets places an undue compliance burden on advisers. Given the evolving nature of the digital asset space, it may be more appropriate for the SEC to consider alternative mechanisms for ensuring the safeguarding of these assets, such as technological advancements in encryption and secure custody solutions. It is crucial for the SEC to collaborate with industry experts and stakeholders to ensure that regulatory frameworks for digital assets align with the transformative potential of blockchain technology. By engaging in robust discussions and consultations, the SEC can develop regulations that strike the right balance between investor protection and innovation. I respectfully urge the SEC to revisit the proposed rule's provisions regarding cryptocurrency assets and consider alternative approaches that foster growth and innovation in this emerging field. By doing so, the SEC can position itself as a leader in designing regulations that accommodate the unique properties of cryptocurrencies while ensuring investor safeguarding. Thank you for considering my comments. I believe that through careful consideration and dialogue, we can establish a regulatory framework that supports both investor protection and technological advancements in the digital asset space. Sincerely, Matt W Sent from my iPhone