Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets". While I commend the intent behind this rule to enhance investor protections and address gaps in the custody rule, I believe there are certain aspects that require further consideration and clarification, especially regarding the definition and treatment of digital assets. The proposed rule fails to provide clear guidance on what constitutes a digital asset. Given the increasing prevalence of digital assets, such as cryptocurrency, in the investment landscape, it is crucial to have a precise and comprehensive definition. This lack of clarity may lead to confusion and potential misinterpretation, undermining the effectiveness and implementation of the rule. One specific concern I have relates to the potential impact of these proposed regulations on the liquidity and stability of digital asset markets, particularly in times of economic stress or volatility. Digital assets, built on blockchain technology, are transforming the financial sector and providing new opportunities for investors. However, regulatory uncertainties can pose challenges, and it is essential to strike a balance between investor protection and fostering growth and innovation in this space. I urge the SEC to conduct further analysis of these risks and consider measures to mitigate them, ensuring that the proposed regulations do not stifle market liquidity or hinder market participants from effectively managing and safeguarding digital assets. Furthermore, I believe it is vital for the SEC to engage with industry stakeholders and experts to gain a deep understanding of the unique characteristics and risks associated with digital assets. Collaborative efforts will lead to better-informed regulations that address potential vulnerabilities and promote a safe and efficient environment for investors. In conclusion, I appreciate the SEC's efforts to enhance investor protections through the proposed rule on safeguarding advisory client assets. However, I urge the Commission to provide further clarity on the definition and treatment of digital assets, considering their growing importance in the investment landscape. Additionally, I request a comprehensive analysis of the potential impact of these proposed regulations on the liquidity and stability of digital asset markets, taking into account the unique challenges and opportunities presented by this emerging industry. Thank you for considering my comments. I look forward to further engagement on this important matter. Sincerely, Gibson Daniel