Oct. 25, 2023
Dear Securities and Exchange Commission, I am writing to share my concerns regarding the proposed rule on safeguarding advisory client assets, specifically in relation to the lack of clarity on the definition of digital assets. As a Certified Public Accountant (CPA) with a deep understanding of the financial industry, I believe that this issue requires careful consideration to properly address the transformative nature of digital assets, such as cryptocurrencies, that are built on blockchain technology. Digital assets, particularly cryptocurrency, have become an integral part of the financial landscape, offering innovative solutions and opportunities for investors. However, the regulatory framework surrounding these assets has been subject to much uncertainty and inconsistency. The proposed rule, unfortunately, fails to provide clear guidance on what constitutes a digital asset, which may prove detrimental to the effective implementation and compliance of the rule. Without a precise definition of digital assets, investment advisers will struggle to identify the relevant regulations applicable to their clients' holdings. This lack of clarity may result in inadvertent non-compliance or the misinterpretation of the rule's requirements, risking potential penalties and legal implications. Furthermore, without a clear understanding of what constitutes a digital asset, it becomes challenging to implement appropriate safeguards and demonstrate compliance to investors, hindering the goal of enhanced investor protection. I urge the Securities and Exchange Commission to work towards a clear and comprehensive definition of digital assets within the proposed rule. This definition should encompass all variations of digital assets, including cryptocurrencies, virtual currencies, and other forms of blockchain-based assets. It is essential that the definition be inclusive and adaptable, considering the rapidly evolving nature of the digital asset ecosystem. Additionally, the SEC should engage with industry experts, stakeholders, and market participants to gain a comprehensive understanding of the nuances and complexities associated with digital assets. Collaboration and open dialogue are crucial to establishing a regulatory framework that both ensures investor protection and encourages innovation and growth within the digital asset space. In conclusion, I strongly believe that addressing the lack of clarity surrounding the definition of digital assets is paramount to the successful implementation of the proposed rule on safeguarding advisory client assets. The SEC must seize the opportunity to provide much-needed guidance to investment advisers and create a regulatory landscape that fosters investor confidence and supports the growth of digital assets within the financial industry. Thank you for considering my concerns. I look forward to seeing a comprehensive and clarified rule that effectively addresses the challenges posed by digital assets. Sincerely, Gerry Horowitz, CPA