Oct. 25, 2023
Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Public Comment on Proposed Rule "Safeguarding Advisory Client Assets" (File No. S7-11-21) Dear Sir/Madam, I am writing to express my concerns and provide feedback on the proposed rule "Safeguarding Advisory Client Assets" (File No. S7-11-21) issued by the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protection and address gaps in the custody rule, I believe that certain aspects of the rule need further clarification and consideration, especially regarding the definition and treatment of digital assets or cryptocurrencies. The proposed rule introduces amendments to enhance the protection of client assets, particularly in the context of digital assets. However, there is a lack of clarity surrounding the definition and categorization of digital assets within the rule. It is imperative that clear guidance is provided to investment advisers, as well as market participants, on what constitutes a digital asset. Without clear definitions, the rule may inadvertently lead to confusion, misinterpretation, and potential compliance challenges for investment advisers and custodians. Digital assets, such as cryptocurrencies, have gained significant traction in recent years and have transformed the financial landscape. However, the rapid evolution and unique characteristics of digital assets make it imperative to establish a comprehensive regulatory framework that addresses their specificities while ensuring investor protection. The proposed rule should explicitly define digital assets and provide guidance on their categorization, custody, and the application of the rule to these assets. Additionally, given the dynamic nature of the digital asset market, the proposed rule should acknowledge the need for ongoing monitoring and periodic updates to ensure that regulatory measures remain effective and adaptive. Continuous engagement with industry participants, market experts, and relevant stakeholders would be beneficial in formulating comprehensive regulations that strike a balance between investor protection and fostering innovation in the digital asset space. Furthermore, I commend the SEC for taking into consideration the economic impact of the proposed rule. The SEC's analysis highlights the potential benefits of enhanced investor protection and regulatory oversight. However, it is equally important to consider the potential drawbacks and costs of compliance, particularly for qualified custodians and smaller market participants. I urge the SEC to weigh the costs and benefits of the rule with a deep understanding of the digital asset market and its impact on the advisory industry. It is crucial to foster an environment that encourages innovation, competition, and capital formation, while simultaneously protecting investors and safeguarding their assets. As a concerned citizen, I hope the SEC will carefully consider my comments and thoroughly evaluate the implications of the proposed rule on the digital asset industry. I welcome the opportunity to provide additional input and engage in further discussions to ensure that the final rule achieves its intended objectives while addressing concerns raised by market participants. Finally, I appreciate the SEC's commitment to open dialogue and transparency throughout this rulemaking process. I commend the agency for providing a forum for public comments and the opportunity to share valuable insights and perspectives. I remain convinced that through collaborative efforts, we can establish a robust regulatory framework that not only safeguards client assets but also allows for continued growth and innovation in the advisory industry. Thank you for considering my comments. Should you require any further information or clarification, please do not hesitate to contact me. Sincerely,