Oct. 23, 2023
Dear Securities and Exchange Commission, I, Luka Stres, am writing this public comment to express my concerns regarding the proposed rule on Safeguarding Advisory Client Assets. While I appreciate the objective of enhancing investor protections and addressing gaps in the custody rule, there are some significant issues that need to be addressed before implementing these rule proposals. One of the primary concerns I have is the lack of clarity on custody requirements for digital assets. As the proposal does not provide clear guidelines on how investment advisers should safeguard digital assets, it creates uncertainty and challenges for market participants. Digital assets, like cryptocurrencies, are built on blockchain technology and have transformed the financial landscape. However, the regulatory uncertainties surrounding these assets hinder their widespread adoption and efficacy. Given the increasing popularity and utilization of digital assets, it is crucial for the SEC to establish clear and comprehensive guidelines for their custody. The lack of clarity not only hampers investor protection but also stifles innovation in the financial services industry. Investment advisers must be equipped with the knowledge and regulatory framework necessary to securely and efficiently handle digital assets on behalf of their clients. In order to foster the growth and development of the digital asset market, the SEC should work towards providing specific requirements and best practices for the custody of these assets. This would ensure that investment advisers are able to safely navigate the unique challenges presented by digital assets while safeguarding the interests of their clients. Furthermore, the proposal should make distinctions between different types of digital assets and their custody requirements. Cryptocurrencies, for example, may require a different approach compared to other types of digital assets. A blanket policy for all digital assets will not effectively address the complexities and nuances associated with these innovative financial instruments. Additionally, the SEC should consider engaging with industry experts and stakeholders in formulating the regulatory framework for digital asset custody. Collaborating with market participants, including qualified custodians and technology providers, will help create a robust and practical set of guidelines that provide both investor protection and support for the growth of the digital asset market. In conclusion, the proposed rule on Safeguarding Advisory Client Assets must provide clear and comprehensive guidelines for the custody of digital assets. This will enhance investor protections and promote innovation in the financial services industry. I urge the SEC to address the concerns raised and ensure that the final rule reflects the rapidly evolving landscape of digital assets. Thank you for considering my public comment. I believe that such improvements will lead to a more secure and thriving digital asset market. Sincerely, Luka Stres