Oct. 24, 2023
Dear Rulemaking Team, I am writing to submit my public comment on the "Safeguarding Advisory Client Assets" proposal (Release No. IA-4148) from the Securities and Exchange Commission (SEC). As a concerned individual with a strong interest in investor protection and the regulation of investment advisers, I offer the following insights and concerns about the proposed rule changes. Firstly, I am concerned about the lack of available data to accurately estimate the number of Forms that will be filed as a result of these proposed regulations. Without proper data, it is challenging to assess the full impact and implementation requirements of the proposed rule accurately. I urge the SEC to conduct additional research and analysis to inform this estimation. Secondly, I am deeply interested in understanding the role of third-party service providers in assisting digital asset brokers with compliance efforts. It is crucial to clarify any potential liability issues that may arise from partnerships and determine the responsibilities and obligations of such service providers in safeguarding client assets. Furthermore, with the rapid pace of technological advancements shaping the landscape of digital asset transactions, it is essential to establish a process for reviewing and updating these proposed regulations. Will there be opportunities for stakeholder input throughout this process? Transparency and collaboration with industry participants are paramount to ensuring regulations remain relevant and effective. Regarding the public hearing scheduling process, I kindly request more information on how requests to speak will be evaluated and selected. It is important to provide a fair and inclusive platform for diverse perspectives to be heard. Moreover, I am concerned about the potential chilling effect these proposed regulations could have on innovation within the digital asset industry. While addressing tax compliance and safeguarding investor interests are important, it is essential to balance these objectives with fostering growth and development in this emerging sector. I strongly urge the SEC to consider alternative approaches and regulatory frameworks that support both goals. In addition, I request further details on the specific types of information that will be collected as part of these proposed regulations. Furthermore, I would like clarification on any plans for sharing this information with other government agencies or private entities. Transparency and clear data usage policies are vital for public trust and safeguarding privacy. Clarity regarding the timeline for implementing these proposed regulations is essential. It would be beneficial to outline any interim measures that may be put in place to ensure a smooth transition and compliance with the new requirements. Providing clear expectations and guidance will assist affected parties in understanding their obligations. I also seek clarification on the penalties and enforcement mechanisms associated with non-compliance with these proposed regulations. It is crucial to understand the consequences of non-compliance fully. Moreover, provisions for leniency or amnesty programs for early adopters seeking to come into compliance can provide incentives and ensure a fair transition. Considering the global nature of digital asset markets and differing regulatory frameworks worldwide, I am concerned about the potential impact of these proposed regulations on the competitiveness of the U.S. market. It would be beneficial to conduct further analysis on the risks and explore measures to promote consistency and harmonization across jurisdictions. Finally, I request additional guidance on how these proposed regulations will interact with existing anti-money laundering and know-your-customer requirements applicable to digital asset brokers. Coordination and alignment between these two sets of rules are essential to avoid duplicative or conflicting obligations. In conclusion, I urge the SEC to carefully consider the concerns and suggestions raised above. The proposed rule amendments have the potential to significantly impact the digital asset industry and investor protection. By addressing the issues outlined, the SEC can ensure that the final regulations strike a proper balance between safeguarding client assets and encouraging continued innovation in this rapidly evolving landscape. Thank you for the opportunity to provide my feedback on this critical matter. Sincerely, Lauren Stewart