Oct. 22, 2023
Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Public Comment - Safeguarding Advisory Client Assets Proposal Dear Sir or Madam, I am writing to express my concerns regarding the Securities and Exchange Commission's proposal on the "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections, I believe there are several issues with the proposed rule amendments that I would like to highlight. Firstly, I find it concerning that the proposed rule does not sufficiently consider global regulatory standards for digital assets. In an increasingly interconnected and globalized financial landscape, it is imperative that regulatory frameworks align to avoid fragmentation and hinder cross-border transactions. It is crucial for the SEC to engage with international regulatory bodies to ensure harmonization and facilitate efficient and secure cross-border flows of digital assets. Moreover, I have reservations about the complexity and potential inconsistencies that may arise from the proposed reporting requirements for participants in Decentralized Finance (DeFi). The requirement of multiple, inconsistent reports for the same transaction could lead to confusion and hinder the usability and efficiency of DeFi protocols. It is crucial for the SEC to establish clear and unified reporting standards that align with the evolving nature of decentralized technologies. In addition to these concerns, I would like to raise a broader issue regarding the proposed rule's economic analysis. While I understand the importance of estimating costs and benefits, it is challenging to capture the full economic effects due to varying practices among investment advisers. As such, it is crucial for the SEC to engage in comprehensive consultation with industry experts and stakeholders to ensure a nuanced examination of the economic impacts of the proposed rule amendments. Furthermore, I urge the SEC to closely consider the potential unintended consequences on small entities. The proposed rule could impose significant compliance burdens and costs on small advisers, potentially hindering their ability to serve clients effectively. I implore the SEC to carefully assess the impact on small entities and consider possible alternatives or simplifications to alleviate potential barriers to entry and growth. In conclusion, I appreciate the SEC's dedication to enhancing investor protections through the proposed rule. However, I believe there are areas that require further consideration and refinement to ensure the seamless integration of global regulatory standards, the effectiveness and efficiency of DeFi protocols, and the sustainable growth of small entities in the advisory industry. I look forward to the SEC's responsiveness to these concerns and further engagement with stakeholders. Thank you for your attention to this matter. Sincerely, Jeff Anderson