Oct. 23, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on safeguarding advisory client assets. While I understand the need to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the proposed rule may have a potential negative impact on investor access, particularly in relation to digital assets or cryptocurrency. Digital assets, such as cryptocurrency, have emerged as a transformative force in finance, driven by blockchain technology. These assets have gained significant popularity among investors, offering new opportunities for diversification and growth. However, the regulatory uncertainties surrounding digital assets pose challenges for both investors and investment advisers. The proposed rule expands the coverage to include a broader range of investments held in a client's account, thereby encompassing digital assets. While it is essential to set guidelines for safeguarding these assets, it is equally important to ensure that the rules do not unduly restrict investor access to this emerging asset class. Restrictive regulations could limit the ability of investors to participate in digital assets, potentially impeding innovation and growth in this sector. As the proposed rule grapples with the application of the custody rule to crypto assets and challenges in demonstrating exclusive control, it is crucial to strike a balance between investor protection and fostering an environment that allows for continued development and access to digital assets. The rapid pace of technological advancements necessitates a forward-looking regulatory framework that can adapt to the evolving landscape of digital assets. I urge the Securities and Exchange Commission to carefully consider the potential negative impact that overly restrictive regulations may have on investor access to digital assets. As part of the regulatory process, it is crucial to strike a balance between safeguarding client assets and encouraging innovation in the digital asset space. I believe that a nuanced approach that addresses investor protection concerns while fostering a conducive environment for digital asset participation is vital to ensuring the continued growth and success of this transformative sector. Thank you for considering my concerns. I look forward to a robust public discussion on this matter. Sincerely, John Sorensen