Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to provide a public comment on the proposed rule "Safeguarding Advisory Client Assets". While I recognize the intent to enhance investor protections and address gaps in the custody rule, I have concerns regarding the lack of industry expertise displayed in the drafting of the proposal. It is vital that regulations in the digital assets and cryptocurrency space are informed and considerate of the unique characteristics of this rapidly evolving industry. One major concern I have is the poorly defined terms used throughout the proposal. Terms such as "platform", "software", and "ledger" are susceptible to various interpretations, leaving room for confusion and challenges in implementation. Additionally, the definition provided for terms like "wallet" and "validator" does not accurately describe their technical meaning in the digital asset and cryptocurrency context. This lack of clarity and understanding could lead to misguided enforcement and unintended consequences. In order to ensure effective regulation in this space, it is crucial for the Securities and Exchange Commission to seek input from industry experts who possess a deep understanding of digital assets and cryptocurrency. This will help avoid regulatory overreach and better align the proposed rule with the realities of the industry. Furthermore, the proposed rule could benefit from additional specificity and guidance. While the aim is to enhance client asset protection, the current proposal appears insufficient in addressing the complexities and uniqueness of digital assets. The SEC should consider working closely with industry experts to develop clearer guidelines that account for the technical aspects of digital assets and establish best practices for safeguarding these assets. To encourage collaboration and avoid inadvertently stifling innovation, it is essential that the SEC engages with key stakeholders in the digital asset and cryptocurrency space. This will help create a regulatory framework that provides investor protections while still promoting growth and development within the industry. In conclusion, it is imperative that the SEC draws upon the expertise of industry professionals when crafting and refining regulations pertaining to digital assets and cryptocurrency. Without a deep understanding of the industry's unique characteristics, there is a risk of confusion, overreach, and unintended consequences. Clarifying poorly defined terms and providing specific guidance will contribute to the development of effective regulations that balance investor protections and the need for continued innovation. Thank you for considering my concerns. I appreciate the opportunity to provide input on this important matter. Sincerely, Jordan Reed