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 aim of enhancing investor protections and addressing gaps in the custody rule, there are several areas of the proposal that require further clarification and consideration, particularly with regards to digital assets. One of the main issues I would like to address is the lack of clarity in defining digital assets. As the proposal stands, there is no specific guidance on what constitutes a digital asset, which can lead to confusion and potential misinterpretation. Given the evolving nature of digital asset markets, it is essential that the definition is clearly outlined to provide certainty for investment advisers. Digital assets, such as cryptocurrencies, are rapidly transforming the financial landscape. The inclusion of digital assets in the proposal is a step in the right direction, but it is crucial to ensure that the framework is comprehensive and adaptable to new advancements in technology. This will enable investment advisers to effectively safeguard client assets in the digital realm. Additionally, as we discuss the safeguarding of client assets, it is imperative to consider fundamental principles such as freedom of speech and freedom of movement. Regulations should strike a balance between addressing potential risks and preserving the rights and freedoms of individuals. Any restrictions or requirements imposed on investment advisers should be carefully crafted to avoid impinging on these essential rights. Moreover, I would like to encourage the Securities and Exchange Commission to explore reasonable alternatives to the proposed rule. While investor protection is of paramount importance, it is vital to also consider the potential unintended consequences or burdens imposed on investment advisers and the overall market. By engaging in open dialogue and seeking input from industry participants, a more effective and balanced rule can be developed. Furthermore, I believe there should be increased clarity on the transition period and compliance dates. Given the potential adjustments that investment advisers will need to make to adhere to the new rule, a clearly outlined timeline will provide the necessary guidance for compliance. Finally, I would like to express my support for a thorough economic analysis that includes both qualitative and quantitative assessments of the proposed rule. Given the varying practices among investment advisers, it is challenging to estimate the economic effects accurately. However, by conducting a comprehensive analysis, the Securities and Exchange Commission can identify the potential costs and benefits associated with the rule to make informed decisions. In conclusion, I urge the Securities and Exchange Commission to address the concerns raised regarding the definition of digital assets, consider the principles of freedom of speech and freedom of movement, explore reasonable alternatives, provide clarity on transition periods, and conduct a thorough economic analysis of the proposed rule. By doing so, we can ensure an effective and balanced framework that upholds investor protection while fostering innovation and economic growth in the advisory industry. Sincerely, Junior Mejia