Oct. 30, 2023
To the Securities and Exchange Commission, I am writing to express concern regarding the expansive scope and coverage of the proposed rules on safeguarding advisory client assets under the Investment Advisers Act (Release No. IA-6191; File No. S7-25-22). While enhancing custody requirements and protections for certain digital assets is a commendable goal, casting such a wide net by potentially designating every user of a decentralized smart contract as an "exchange" subject to registration and oversight goes too far. The SEC should take a more measured approach that accounts for the nuances of how different actors interact with decentralized finance protocols. Expecting decentralized software developers or those passively yielding returns through smart contracts to register as regulated exchanges betrays a fundamental misunderstanding of the technology involved. It is tantamount to suggesting that anyone using an open-source software protocol should be considered an exchange operator. A more reasonable approach would be focusing any registration or oversight requirements on those operating the core infrastructure or actively managing asset pools rather than capturing every ancillary user. Otherwise, these rules could stifle innovation in decentralized finance and deny Americans opportunities from passively generating wealth through smart contract participation. I urge the SEC to reconsider the expansive scope of the proposed rules and their unintended consequences for decentralized technology development. Thank you for the opportunity to comment on this important issue. Sent with Proton Mail secure email.