Oct. 23, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule “Safeguarding advisory client assets”. While I appreciate the SEC’s efforts to enhance investor, protections and address gaps in the custody rule, I believe that certain assets of the proposed rule may have unintended consequences and hinder innovation, Particularly in the realm of digital assets or cryptocurrencies. Digital assets, such as cryptocurrencies, built on Blockchain technology, have the potential to revolutionize the financial sector, However, regulatory uncertainty surrounding these assets has created challenges for both investors and industry participants. I commend the SEC for including provisions in the proposed rule that address the application of safeguarding rules to digital assets. Nevertheless, I fear that the current approach may result in overregulation and stifle of the free exchange of ideas and information in this rapidly evolving space. By imposing overly burdensome regulations, the SEC risks, the ability of individuals and businesses to explore new technologies and financial products. It is crucial that the SEC adopts, a balanced approach that fosters innovation, while ensuring investor protection. Instead of stifling the industry, the SEC should embrace the transformative potential of digital assets and work towards creating a regulatory framework that encourages responsible innovation. In addition to addressing digital assets, I would like to highlight a particular concern regarding the proposed rules impact on the free exchange of ideas and information. The new rule, as currently drafted, may discourage individuals and firms from sharing knowledge and collaborating on digital asset projects. The classification of digital assets and custodial assets under the proposed rule, creates ambiguity and potential liability for industry participants. This uncertainty hampers the ability of stakeholders to freely, collaborate and explore potential used cases for digital assets. To ensure that the regulatory framework strikes the right balance, I urge the SEC to consider providing clear, guidance and exemptions, specifically tailored to the unique characteristics of digital assets. This would allow for responsible innovation in investment while safeguarding investor interests. Furthermore, I would like to emphasize the importance of implementing proportionate regulations. While it is essential to protect investors and prevent asset loss, imposing, excessive compliance, burdens, may hamper industry, growth, and hinder market efficiency. I urge the SEC to carefully assess the economic impact, and costs associated with the proposed rule, especially with the regard to compliance for investors and advisers and qualified custodians. Striking a balance between investor protection in promoting competition in capital formation is crucial to fostering a robust and innovative, financial ecosystem. In conclusion, I commend the SEC for its efforts to enhance investor protections through the proposed rule “Safeguarding advisory client assets”. However, in the context of digital assets, I urge the SEC to adopt a balanced approach that promotes innovation, fosters collaboration and encourages responsible investment while ensuring adequate protections for investors. Clear, guidance and proportionate regulations will be instrumental in achieving this delicate balance . Thank you for considering my comment. I trust that the SEC will thoroughly evaluate the concerns raised by stakeholders, and take a comprehensive approach that benefits, both investors and the evolving digital asset industry. Sincerely, Matthew Keirn