Oct. 23, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" (Release No. IA-XXXX) from the SEC. While I appreciate the intention to enhance investor protections and address gaps in the custody rule, I have concerns regarding the scope of the rule, specifically in regards to the inadequate consideration of the unique properties of cryptocurrency and the privacy implications of the proposed requirements. Firstly, I would like to address the SEC's approach to cryptocurrency. It is evident that the agency has failed to adequately consider the decentralized nature and technological complexities of cryptocurrency. The proposed rule does not provide meaningful guidance on how investment advisers should safeguard and demonstrate exclusive control over digital assets. This creates impractical regulatory requirements that hinder the growth and innovation of the cryptocurrency industry. While it is essential to protect investors, it is equally important to foster an environment that encourages technological advancement and financial inclusion. Furthermore, the privacy implications of the proposed requirements raise significant concerns. The rule requires investment advisers to provide clients with custodian information and custodial account numbers, which in turn requires the disclosure of sensitive financial data. While investor protection is paramount, the SEC must balance this with preserving the privacy and safety of individuals. Requiring the disclosure of such sensitive information to multiple third parties may increase the risk of identity theft, fraud, and unauthorized access to personal financial information. It is essential to establish robust safeguards and protocols to mitigate these risks and protect investor privacy. In light of these concerns, I urge the SEC to reevaluate the proposed rule and incorporate revisions that consider the unique properties of cryptocurrency and address the privacy implications of the requirements. A balanced approach that ensures investor protection while promoting innovation and safeguarding privacy is necessary. To achieve this, the SEC should collaborate with industry experts and stakeholders to develop practical regulatory measures that address the specific challenges posed by cryptocurrency and minimize the privacy risks associated with the proposed disclosures. In conclusion, I appreciate the Securities and Exchange Commission's efforts to enhance investor protections through the proposed rule on safeguarding advisory client assets. However, it is crucial for the SEC to revise the rule to adequately consider the unique properties of cryptocurrency and address the privacy implications of the proposed requirements. By promoting innovation, protecting privacy, and fostering effective oversight, the SEC can strike a balance that benefits both investors and the cryptocurrency industry. Thank you for considering my concerns and comments on this proposal. Sincerely, Johnny