Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to submit my public comment on the "Safeguarding Advisory Client Assets" proposal (File Number: S7-04-23). While I appreciate the SEC's intention to enhance investor protections and address gaps in the custody rule, I have concerns regarding the potential overreach of the SEC's regulatory authority and the treatment of digital assets within the proposed rule. Firstly, I would like to highlight the potential overreach of regulatory authority by the SEC in this proposal. While I acknowledge the need for safeguarding client assets, it seems that the SEC's proposed rule may exceed its regulatory authority, encroaching on areas that should be regulated by other agencies. It is essential that regulatory authority be clearly defined and properly allocated to different agencies to foster a healthy and balanced regulatory environment. Additionally, I would like to address the treatment of digital assets or crypto within the proposed rule. It is undeniable that digital assets, such as cryptocurrencies, have brought significant innovation and transformation to the financial industry. However, the regulatory uncertainties surrounding these assets pose challenges that need to be carefully considered. The proposed rule briefly acknowledges the application of the rule to crypto assets but lacks specific guidance and framework to address the unique characteristics of these assets. It is crucial for the SEC to provide clear guidelines on how investment advisers should safeguard digital assets while navigating the complexities of blockchain technology and ensuring compliance with existing regulations. Moreover, with the global nature of crypto markets, it is imperative for regulators to take a collaborative approach in crafting comprehensive frameworks that address investor protection without stifling innovation. Cooperation and harmonization between domestic and international regulatory bodies will foster a regulatory environment that can effectively oversee these emerging technologies and protect investors' interests. In conclusion, while I understand the SEC's objectives to enhance investor protections and fill gaps in the custody rule, I express concerns regarding the potential overreach of regulatory authority and the treatment of digital assets within the proposed rule. It is crucial for the SEC to strike a balance between safeguarding client assets and promoting innovation. Clear guidance and collaboration with other agencies will ensure that the rule adequately addresses the unique challenges posed by digital assets. Thank you for considering my comments on this important issue. I appreciate the SEC's commitment to seeking public input and I trust that my concerns will be taken into account during the rulemaking process. Sincerely, Pinko