Oct. 24, 2023
Dear Securities and Exchange Commission, I am writing to submit my public comment on the proposed rule "Safeguarding Advisory Client Assets." I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, but I have some concerns that I would like to address. Firstly, I would like to raise the issue of inconsistent regulatory treatment of decentralized exchanges. As the proposed rules currently stand, there is a lack of comprehensive and clear regulatory guidance for these platforms. This creates uncertainty and makes it difficult for market participants to operate within a regulated framework. I strongly believe that clear and concise regulations for decentralized exchanges are necessary to ensure market integrity and investor protection. Secondly, I am concerned about the regulatory ambiguities surrounding digital assets, particularly cryptocurrencies. These assets have the potential to revolutionize the financial industry, but their regulatory status remains unclear. This lack of clarity not only hinders innovation but also poses risks to investors and investment advisers who operate in this space. It is crucial that the SEC provides comprehensive regulations for digital assets to foster market growth while mitigating potential risks. I would also like to address the potential compliance costs that investment advisers may incur as a result of these proposed rules. While investor protection is of utmost importance, it is essential to consider the economic impact on investment firms. It would be helpful to have a clear understanding of the cumulative costs associated with these regulations to assess their potential implications. Lastly, I seek clarification regarding the rationale behind the proposed one-year transition period and the determination of compliance dates based on assets under management. Transparency in the decision-making process is vital to ensure that investment advisers can adequately prepare for the changes required by the new rules. In conclusion, I respectfully urge the SEC to address my concerns regarding the inconsistent regulatory treatment of decentralized exchanges, the regulatory uncertainties surrounding digital assets, and the potential burdensome compliance costs for investment advisers. I believe that clear and well-defined regulations will foster a healthy and innovative market environment. Thank you for considering my comments. Sincerely, Daniel Garlow