Oct. 22, 2023
Dear Securities and Exchange Commission, I'm writing to express my concerns about the proposed rule "Safeguarding Advisory Client Assets" and the lack of clarity around digital assets. As the use of digital assets like cryptocurrencies grows, it's important for regulators to provide clear guidance to protect investors and the industry. The proposed rule mentions that it applies to crypto assets, but it doesn't give a clear definition of what a digital asset is. This lack of clarity raises concerns and leaves room for different interpretations. Without a clear understanding, firms might have their own ideas, leading to inconsistent practices and potential risks for investors. The rise of decentralized finance (DeFi) platforms and blockchain technology makes it even more important to have clear guidelines. These platforms offer various financial products and services that use digital assets in unique ways. Unfortunately, the proposed rule doesn't address how these assets should be treated or how advisers should handle them. To ensure investor protection and encourage innovation with digital assets, it's crucial for the SEC to provide clear definitions and guidance. This will give market participants a solid foundation to build compliant and transparent practices. It will benefit both clients and the industry as a whole. I encourage the SEC to work towards establishing a comprehensive framework that defines digital assets and provides best practices for their custody. This could involve consulting experts, market participants, and stakeholders, as well as studying regulations and practices in jurisdictions that have embraced digital assets. In conclusion, the lack of clarity on digital assets in the proposed rule is a big obstacle for effective regulation and growth in the financial industry. Providing clear guidance will protect investors, promote innovation, and bring transparency to the emerging digital asset space. Please take these concerns into account and strive for greater clarity and regulatory certainty. Thank you for considering my comments. Sincerely, Erik Hernandez