Oct. 22, 2023
Dear Securities and Exchange Commission, I, Kang Sung Yen, am writing to express my concerns and bring attention to certain aspects of 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, I believe that certain provisions may have unintended consequences and could benefit from further consideration. Specifically, I would like to highlight the burden imposed on exchanges to monitor and report suspicious activities and the potential privacy and safety risks associated with the disclosure of sensitive financial data. Firstly, I have concerns regarding the burden placed on exchanges to monitor and report suspicious activities. The proposed rules acknowledge the challenges that exchanges face in this regard, particularly given the pseudonymous nature of blockchain transactions. It is crucial to recognize that exchanges may already have robust compliance programs in place to prevent money laundering and other illicit activities. The proposed rule, as currently drafted, could place an additional burden on exchanges that may be costly to implement and may jeopardize the privacy of their customers. Therefore, it is essential for the SEC to take into account the potential challenges and costs that exchanges might incur when monitoring these activities. Furthermore, I am deeply concerned about the privacy and safety implications associated with allowing numerous third parties access to sensitive financial data and personal information, such as social security numbers. While investor protections are paramount, it is equally important to safeguard personal information and ensure that it is not vulnerable to misuse or unauthorized access. The proposed rule should consider implementing adequate data protection measures to address these concerns. Striking the right balance will be crucial to avoid unintended consequences that may undermine investor confidence and expose individuals to privacy risks. In addition to the specific concerns mentioned above, I would like to emphasize the importance of flexibility and adaptability in drafting the proposed rule. As technology and market conditions continue to evolve at an unprecedented pace, it is crucial to build rules that can accommodate future adjustments and innovations. I strongly urge the SEC to consider incorporating provisions that allow for the rule's adaptation to account for rapid technological developments and changing expectations regarding data protection and privacy. By building flexibility into the rule, regulators can ensure its long-term viability and effectiveness in protecting both investors and their sensitive financial information. Furthermore, it is essential to give due consideration to the impact of the proposed rule on the digital economy. In this era of rapid technological advancement, regulations need to strike a balance between protecting consumers and promoting innovation, competition, and economic growth. Therefore, I recommend that the SEC thoroughly assess the potential impacts of the proposed rule on tech companies, startups, and digital innovation as a whole. By understanding the potential consequences, regulators can tailor the rule to foster innovation, encourage competition, and ultimately contribute to a thriving digital economy. In conclusion, I respectfully request that the SEC give careful consideration to the concerns regarding the burden on exchanges to monitor and report suspicious activities and the potential privacy risks associated with the disclosure of sensitive financial data. Additionally, I urge the SEC to design the proposed rule with flexibility and adaptability in mind, considering the rapid changes in technology and market conditions. Lastly, I emphasize the importance of assessing the impact on the digital economy and ensuring that the rule promotes entrepreneurship and innovation. Thank you for considering my views and comments on the proposed rule. Sincerely, Kang Sung Yen