Oct. 29, 2023
Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Public Comment on "Safeguarding Advisory Client Assets" Proposal (File No. [insert file number]) Dear Sir/Madam, I am writing to express my concerns regarding the Securities and Exchange Commission's (SEC) proposed rule "Safeguarding Advisory Client Assets" (File No. [insert file number]). While I appreciate the aim to enhance investor protections and address gaps in the custody rule, there are several issues within the proposal that require further clarification and revision. One particular area of concern is the lack of clarity in the definition and treatment of digital assets. The proposal fails to provide clear guidance on what constitutes a digital asset, creating an atmosphere of uncertainty and potential misinterpretation. Given the evolving nature of digital assets and the varying degrees of custody associated with them, it is crucial that the SEC provides clear definitions and specific guidelines to ensure consistent and effective regulatory oversight. Furthermore, the proposed reporting requirements for participants in decentralized finance (DeFi) present a confusing and burdensome landscape. The proposed regulations seemingly place reporting obligations on a wide range of entities within the DeFi space, leading to multiple and inconsistent reports being generated for the same transaction. This approach not only adds unnecessary complexity but also poses significant compliance challenges for DeFi participants and stifles innovation within this emerging sector. In order to ensure effective investor protection while fostering innovation, it is imperative that the SEC takes a balanced and nuanced approach. The regulatory framework must support the unique characteristics of digital assets and decentralized finance, rather than stifling their growth potential. Therefore, I urge the SEC to work closely with industry experts and participants to develop regulations that strike a better balance between investor protection and the promotion of a vibrant and competitive market. Moreover, it is crucial for the SEC to provide greater clarity around the proposed reporting requirements and define clear boundaries with respect to which entities are subject to these obligations. This clarity is necessary to facilitate meaningful compliance and mitigate the risk of inconsistent reporting practices that could arise from overly broad mandates. Finally, I commend the SEC for including an economic analysis that evaluates both the costs and benefits of the proposed rule. It is essential to ensure that the benefits of enhanced investor protections outweigh the compliance costs imposed on market participants. I encourage the SEC to continue refining its analysis and soliciting feedback from stakeholders to accurately assess the economic effects of the proposed rule and minimize any unintended consequences. In conclusion, while I fully support the SEC's aim to strengthen the safeguarding of advisory client assets, I urge the Commission to consider the concerns expressed regarding the lack of clarity on digital asset definitions and the confusion surrounding the reporting requirements for DeFi participants. By fostering greater collaboration with industry participants and taking a measured approach, the SEC can develop regulations that strike a harmonious balance between investor protection and market innovation. Thank you for considering my comments. I appreciate the opportunity to provide input on this important rulemaking proposal. Sincerely, Pete Robbins