Oct. 24, 2023
[10/24/2023] Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Public Comment on "Safeguarding Advisory Client Assets" Proposal To Whom It May Concern, I am writing to submit my public comment on the proposed rule regarding the safeguarding of client assets by investment advisers. This rule aims to address gaps in the custody rule and enhance investor protections. While I appreciate the SEC's efforts to adapt regulations to evolving industry practices, I would like to express my concerns regarding the lack of clarity surrounding the definition of digital assets within the proposed rule. Digital assets, particularly cryptocurrencies, have emerged as innovative financial instruments built on blockchain technology, transforming the landscape of finance. However, the regulatory landscape surrounding digital assets remains uncertain and complex. It is crucial for the SEC to provide clear and comprehensive guidance on what constitutes a digital asset within the context of this proposed rule. Ambiguities within the definition of digital assets can lead to confusion and potential misinterpretation of the rule, hindering regulatory compliance efforts by investment advisers and disincentivizing the adoption of this groundbreaking technology. Furthermore, I would like to address a specific concern pertaining to the proposed rule and its potential impact on a recent case involving Richard J Heart a/k/a Richard Heart, who has been subject to allegations of securities fraud. It is essential to ensure that the proposed rule does not inadvertently stifle innovation and legitimate investment opportunities within the digital asset space. While investor protection should be a top priority, it is crucial not to create an environment that hampers the growth and development of this nascent industry. I urge the SEC to consider engaging with industry experts, market participants, and other relevant stakeholders to craft a precise definition of digital assets within the proposed rule. Such engagement would help foster clarity and harmonization in the regulatory approach toward digital assets, ensuring investor protection while facilitating responsible innovation within this rapidly evolving sector. Additionally, I appreciate the SEC's thorough economic analysis of the proposed rule, including an assessment of the benefits, costs, efficiency, competition, and capital formation effects. It is commendable how the SEC recognizes the importance of striking the right balance between safeguarding investor assets and promoting efficiencies in the investment advisory industry. I encourage the SEC to carefully consider any reasonable alternatives to the proposed rule that may further improve upon this balance. I would also like to express my support for the proposed amendments to the surprise examination requirement, increased investor transparency through changes to Form ADV, and the transition period provided for advisers to comply with the new rule. These elements demonstrate the SEC's commitment to ensuring effective implementation of the rule while considering the practical challenges faced by market participants. Once again, I strongly urge the SEC to establish a clear and comprehensive definition of digital assets within the proposed rule, avoiding unnecessary impediments and fostering responsible innovation. The regulatory environment should be one that encourages growth and development while maintaining investor protection. Thank you for considering my comment. I hope that the SEC carefully weighs all concerns raised throughout this public comment period and makes informed decisions in the best interest of investors and the broader financial markets. Sincerely, William M Wilson