Oct. 30, 2023
Anonymous Crypto User October 31, 2023 Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-1090 Re: Safeguarding Advisory Client Assets; File No. S7-26-21 To whom it may concern, I appreciate the opportunity to provide my comments on the proposed rule "Safeguarding Advisory Client Assets" (File No. S7-26-21). As a user actively involved in the digital asset industry, I am particularly concerned about the inadequate consideration of self-custody solutions within the proposed rule. This oversight hinders the development and potential benefits that user-controlled asset management can offer. Digital assets, particularly cryptocurrencies, have emerged as a transformative force in the financial industry. These assets, built on blockchain technology, offer unique opportunities for investors and users alike. They provide efficient and secure ways to store, transfer, and invest value across borders. However, they also present unique regulatory challenges due to their decentralized nature and evolving technology. While I understand the need to ensure the safeguarding of client assets, it is crucial for the Securities and Exchange Commission (SEC) to adapt its regulations to adequately accommodate the characteristics of digital assets. The proposed rule, as currently formulated, falls short in addressing these challenges and fails to provide a proportionate regulatory framework that considers the distinctive nature and requirements of the digital asset ecosystem. Self-custody solutions are an integral part of the digital asset industry, allowing users to have direct control over their assets and portfolio management. Despite the rapid progress in user-controlled asset management solutions, the proposed rule seems to ignore the potential benefits of integrating self-custody into regulatory frameworks. By not providing adequate considerations for these solutions, the SEC risks hampering innovation and excluding a growing segment of the market. The SEC should recognize that self-custody solutions can enhance user privacy, streamline processes, reduce costs, and enable greater financial inclusivity. Given the benefits and market demand for user-controlled asset management, the proposed rule should incorporate provisions that promote the adoption of secure and reliable self-custody solutions. Moreover, the evolving nature of digital assets necessitates a dynamic approach to regulation. The proposed rule's focus on custodial arrangements overlooks the fact that many digital assets are designed to be self-custody and do not fall neatly within traditional custody models. The SEC should embrace this reality and work towards developing flexible regulations that capture the unique attributes of digital assets while maintaining appropriate investor protections. To strike the right balance, I urge the SEC to engage in open and collaborative dialogue with industry stakeholders, developers, and users. This approach would aid in navigating the challenges and complexities associated with the custody and safeguarding of digital assets, ensuring effective regulations without stifling innovation. In conclusion, I strongly urge the SEC to reconsider and revise the proposed rule to provide adequate consideration of self-custody solutions within the digital asset ecosystem. Failure to do so not only inhibits innovation but also limits the ability of users to have direct control over their assets, compromising the principles of decentralization and individual empowerment that underpin this industry. Thank you for your attention to this matter. I hope my comments will contribute to a more inclusive and forward-thinking regulatory framework, designed to harness the potential benefits that digital assets offer. Sincerely, Anonymous Crypto Enthusiast