Oct. 15, 2023
I am writing to express my concerns about the proposed legislation by the SEC regarding the safeguarding of advisory client assets in the context of cryptocurrency and digital assets. As a concerned citizen, I strongly oppose this legislation as I believe it represents an overreach that could stifle innovation and hinder the growth of the digital asset market. While I understand the need for regulatory oversight in this rapidly evolving industry, it is important to recognize that existing laws already provide a framework for the protection of client assets. The Investment Advisers Act of 1940, for example, requires investment advisers to act as fiduciaries and to act in the best interests of their clients. This includes taking reasonable steps to safeguard client assets. By extending their regulatory reach specifically to digital assets, the SEC is essentially duplicating existing requirements and creating unnecessary burdens for market participants. Furthermore, the SEC’s proposal fails to consider the unique characteristics of digital assets. Unlike traditional financial instruments, digital assets are often decentralized and operate on blockchain technology. This decentralized nature inherently provides a level of security and transparency that is not present in traditional financial systems. By imposing stringent custody requirements on digital asset advisers, the SEC is disregarding the inherent security features of these assets and treating them as if they were no different from traditional securities. This not only undermines the potential benefits of digital assets but also stifles innovation in the industry. Additionally, the SEC’s proposal could have a chilling effect on the accessibility of digital assets for retail investors. By imposing onerous custody requirements, the SEC is effectively limiting the number of qualified custodians who can offer their services to digital asset advisers. I urge you to reconsider this proposed legislation and take into account the concerns raised by many in the industry. Thank you for your attention to this matter.