Oct. 21, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns and objections regarding the proposed rule on "Safeguarding Advisory Client Assets." While I understand the need to enhance investor protections and address gaps in the custody rule, I believe that the current rule proposals fail to adequately consider the unique properties of cryptocurrency and raise significant privacy concerns. Firstly, I urge the SEC to take into account the decentralized nature and technological complexities of cryptocurrency. The proposed rule expands the coverage to include a broader range of investments held in a client's account, including crypto assets. However, it is essential to recognize that cryptocurrencies operate differently from traditional assets, and imposing the same regulatory requirements may be impractical and burdensome. The SEC's failure to adequately consider the unique properties of cryptocurrency may result in impractical regulatory requirements that stifle innovation and hinder the growth of this promising asset class. As a result, investors may face unnecessary barriers and limitations in accessing and benefiting from the potential of cryptocurrencies. Additionally, I raise concerns regarding the privacy and safety implications associated with the proposed rule. The rule requires investment advisers to provide custodian information and custodial account numbers to clients in writing when opening an account. While the intention behind this requirement is to enhance transparency and investor protection, it also raises significant privacy concerns. The sharing of sensitive financial data, such as custodial account numbers, with multiple third parties increases the risk of identity theft, fraud, and unauthorized access to personal information. Given the growing prevalence of data breaches and cyberattacks, it is crucial that the SEC address these privacy concerns and find a balance between transparency and data protection. Furthermore, the collection and storage of vast amounts of sensitive financial information, including social security numbers, pose significant risks to individuals' privacy and security. Preserving the privacy of investors should be a paramount consideration in crafting effective regulations, and I urge the SEC to thoroughly assess the potential risks associated with the proposed rule's impact on privacy. In conclusion, I urge the Securities and Exchange Commission to revise the proposed rule on "Safeguarding Advisory Client Assets" to adequately consider the unique properties of cryptocurrency and address the significant privacy concerns associated with sharing sensitive financial data. The SEC should strive to strike a balance between investor protection and safeguarding individual privacy rights. Thank you for considering my public comment on this matter. Sincerely, Omar Diab