Oct. 22, 2023
Dear Securities and Exchange Commission, I would like to provide my comments on the proposed rule "Safeguarding Advisory Client Assets" (Release No. IA-2876; File No. S7-31-21) and express my concerns regarding the potential negative impact on market liquidity, particularly for digital assets, as well as the need for improved emergency situation preparedness and consideration of international competitiveness. Firstly, I am concerned about the potential adverse effects of these proposed regulations on the liquidity of digital assets, including cryptocurrencies, which are built on transformative blockchain technology. The proposed rules may hinder market liquidity for these assets, making it more difficult for investors to buy and sell them. In an era where digital assets are gaining traction and disrupting traditional financial systems, it is crucial to foster an environment that enables innovation and growth while protecting investors. Therefore, I urge the Securities and Exchange Commission (SEC) to ensure that the proposed rule does not inadvertently stifle market liquidity or hinder the development of this emerging asset class. Furthermore, I would like to emphasize the need for adequate emergency situation preparedness within the proposed rule. The draft rule appears to focus primarily on normal operating conditions but fails to adequately consider its applicability during emergency situations, such as financial crises, natural disasters, or pandemics. It is imperative that regulations account for these exceptional circumstances, as they have the potential to impact investment advisers and their ability to safeguard client assets. By incorporating provisions that address emergency situations, the SEC can enhance investor protection and mitigate the risks posed by unforeseen events. In addition, I recommend that the SEC conduct a thorough analysis of the potential impact of these proposed regulations on the competitiveness of the U.S. market vis-à-vis global counterparts. The varying regulatory frameworks around the world create a challenging environment for market participants, who must navigate different requirements in different jurisdictions. It is essential to promote consistency and harmonization across jurisdictions to reduce regulatory burden and enhance U.S. market competitiveness. I urge the SEC to consider ways in which these proposed rules can be aligned with international standards and regulatory frameworks to level the playing field for U.S. firms and facilitate cross-border investments. In conclusion, I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule through the proposed rule "Safeguarding Advisory Client Assets." However, I urge the SEC to carefully consider the potential negative impact on market liquidity for digital assets and ensure that the regulations strike a balance between investor protection and promoting innovation. Moreover, I emphasize the importance of emergency situation preparedness within the rule and urge the SEC to conduct a thorough analysis of the impact on the competitiveness of the U.S. market and promote consistency across jurisdictions. Thank you for considering my comments. Sincerely, Marin Rogich