Oct. 30, 2023
Dear Sir or Madam, I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets" from the Securities and Exchange Commission. While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I believe there are certain aspects of the proposal that require further clarification, specifically regarding the treatment of cross-chain transactions. One area of concern is the lack of clarity surrounding the regulatory treatment of cross-chain transactions. The proposal does not provide clear guidance on how the SEC intends to regulate such transactions, which creates uncertainty for market participants. Cross-chain transactions involve the transfer of assets between different blockchain networks and play a crucial role in the decentralized finance (DeFi) ecosystem. However, without clear guidance, market participants may unwittingly find themselves in violation of SEC regulations, leading to potential regulatory actions. The SEC needs to understand the specifics of cross-chain transactions, especially when the underlying asset remains the same across different blockchain networks. It is important to recognize that these transactions do not involve the physical movement of assets across borders or jurisdictions. Rather, they leverage the interoperability capability of various blockchain networks to provide users with enhanced liquidity and access to a wider range of assets. Failing to understand and address these nuances could hamper the growth and innovation of the decentralized financial ecosystem. I urge the SEC to provide clear and comprehensive guidance on the regulatory treatment of cross-chain transactions. This will not only help market participants navigate the evolving and complex landscape of decentralized finance but also promote regulatory certainty and investor protection. Thank you for considering my concerns. I believe that by taking into account the unique characteristics of cross-chain transactions, the SEC can foster innovation while upholding its mission to protect investors and maintain fair and orderly markets. Sincerely, D. Miler