Oct. 31, 2023
Matthew Smith 10/30/2023 Securities and Exchange Commission 100 F Street NE Washington, DC 20549 Subject: Safeguarding Advisory Client Assets - Proposed Rule [Insert Number] Dear Sir/Madam, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" from the Securities and Exchange Commission (SEC). I commend the SEC for addressing the need to enhance investor protections and safeguard client assets. While I acknowledge the importance of this initiative, I would like to express my concerns regarding the lack of clarity on the definition of digital assets within the proposed rule. Digital assets, particularly cryptocurrencies built on blockchain technology, have emerged as a significant force in transforming the financial landscape. However, the regulatory environment surrounding these assets remains uncertain, creating challenges for both industry participants and regulators alike. It is crucial that any rules put forth by the SEC provide clear and unambiguous guidance on what constitutes a digital asset. One particular concern I have is the treatment of digital assets, such as HEX, PULSECHAIN, and PULSEX, under the proposed rule. These assets, in my understanding, do not meet the criteria for classification as securities under the long-standing Howey test. It is imperative that the SEC recognizes that code can be viewed as a form of free speech, and any attempt to regulate digital assets should be mindful of protecting this fundamental right. Furthermore, I urge the SEC to engage with industry stakeholders, technologists, and legal experts to develop a nuanced and comprehensive framework for regulating digital assets. The decentralized nature of blockchain technology and the globalized nature of the digital asset ecosystem require regulatory solutions that strike a balance between investor protection and fostering innovation and growth. In conclusion, I appreciate the SEC's efforts to enhance investor protections through the proposed rule on safeguarding advisory client assets. However, it is crucial that the SEC provides clear and comprehensive guidance on the definition of digital assets, taking into account the unique characteristics and potential of this emerging asset class. I encourage the SEC to foster dialogue with industry stakeholders and experts to develop a regulatory framework that balances investor protection and the preservation of individual rights and freedoms. Thank you for considering my comments on this important matter. I trust that the SEC will carefully evaluate all feedback received during this public comment period. Should you require any further information or clarification regarding my comments, please do not hesitate to reach out to me. Sincerely, Matthew Smith