Oct. 23, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets" (File No. S7-35-21). While I recognize the importance of enhancing investor protections and addressing gaps in the custody rule, I believe there are several issues with the current proposals that need to be addressed for the sake of fair and efficient regulation. Firstly, I would like to highlight the insufficient consideration of global regulatory standards for digital assets. The proposed rule fails to align with international standards, leading to fragmentation and potential hindrance to cross-border transactions. As the digital asset industry thrives on global connectivity, it is crucial to ensure that regulatory frameworks are consistent across jurisdictions. By disregarding international standards, the SEC risks placing U.S. investors and businesses at a disadvantage in the global market while impeding innovation and growth in the digital asset sector. Furthermore, it is concerning that these proposed regulations would come into effect before companies and protocols have had sufficient time to accommodate them. The timing seems too sudden, leaving investment advisers and market participants with limited opportunity to adapt their operations and practices accordingly. In order to effectively implement these regulations, investment advisers need adequate time to review their systems and processes, make necessary adjustments, and ensure compliance. Rushing into the implementation of these rules may result in unintended consequences and unnecessary burdens on businesses. Additionally, it is important to consider the potential impact of these regulations abroad. The global nature of the financial industry demands cooperation and harmonization between regulatory bodies. However, the current proposals risk creating disparities between U.S. rules and those of other jurisdictions. This could lead to confusion, inefficiency, and hinder the ability of investment advisers to operate globally. It is crucial to avoid unilateral regulatory actions that may isolate the U.S. market and hinder its competitiveness. In conclusion, while I acknowledge the objectives of the proposed rule, I believe there are significant concerns that need to be addressed. The SEC should take into account global regulatory standards for digital assets, provide sufficient time for market participants to prepare for implementation, and consider the potential impact of these regulations on the global financial ecosystem. By doing so, the SEC can ensure a fair, effective, and globally harmonized regulatory framework that promotes investor protection and fosters innovation and growth. Thank you for considering my comments on this matter. I appreciate the opportunity to contribute to the discussion and help shape the future of investor safeguards in the advisory industry. Sincerely, Jeremy Moral