Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, there are a few key issues that I believe need further attention and consideration. First and foremost, I am deeply concerned about the lack of regulatory clarity for tokenized derivatives. The proposed rule does not provide clear guidelines in this area, creating uncertainty and potential regulatory arbitrage. As the digital asset landscape continues to evolve, it is crucial that regulators establish a comprehensive framework to govern these innovative financial instruments. Without clear regulations, there is a risk of stifling innovation and flouting existing laws. I urge the SEC to provide unambiguous guidelines that promote transparency, accountability, and investor protection in the tokenized derivatives market. Furthermore, I am concerned about the potential chilling effect these proposed regulations could have on innovation within the broader fintech ecosystem. Given the rapid pace of technological change and the growing importance of digital assets as a medium of exchange and store of value, it is critical that regulations strike the right balance between fostering innovation and safeguarding investors. The proposed rule, as currently articulated, may inadvertently hinder the development and adoption of new technologies by imposing burdensome compliance requirements. To ensure the continued growth of the fintech sector, I strongly urge the SEC to carefully analyze and consider the potential impact of these regulations on innovation and explore measures to promote flexibility and adaptability in response to future developments. In light of these concerns, I believe it is essential for the SEC to conduct a thorough economic analysis of the proposed rule. Such an analysis should consider the costs and benefits of the rule, including its potential impact on efficiency, competition, and capital formation. While the protection of client assets is paramount, it is equally important to measure the economic effects and practical implications of the proposed regulations. By doing so, the SEC can ensure that the rule achieves its intended objectives without unduly burdening industry participants or stifling innovation. Additionally, I would like to express my support for the SEC's efforts to enhance recordkeeping requirements and improve regulatory oversight. However, I caution against implementing overly onerous compliance obligations that may disproportionately impact smaller investment advisers. It is imperative that the SEC carefully considers and evaluates the specific compliance burdens imposed by the proposed rule, particularly for smaller entities. Furthermore, I urge the SEC to seek public input on potential reasonable alternatives to the proposed rule that could achieve the same level of investor protection while minimizing compliance costs. In conclusion, as a concerned industry participant and advocate for responsible innovation, I urge the SEC to address the lack of regulatory clarity for tokenized derivatives, carefully evaluate the potential impact on innovation and flexibility within the fintech ecosystem, conduct a thorough economic analysis, and consider the specific compliance burdens for smaller investment advisers. I believe that by deliberating on these issues and incorporating feedback from industry stakeholders, the SEC can strike the right balance between protecting investors and fostering innovation. Thank you for considering my comments, and I look forward to continued dialogue on this important matter. Sincerely, Tom Tickle Jnr Sent with Proton Mail secure email.