Oct. 25, 2023
Dear Securities and Exchange Commission, I am writing to submit a public comment on the proposed rule "Safeguarding Advisory Client Assets." While I acknowledge the importance of enhancing investor protections and addressing gaps in the custody rule, I have concerns regarding certain aspects of the proposed rule. Firstly, I am concerned about the scope of the rule. While it is important to include a broader range of investments held in a client's account, it is also crucial to ensure that the rule does not inadvertently restrict investor access to emerging asset classes such as digital assets. Limitations on investor access to these assets could hinder their ability to participate in this rapidly evolving market, potentially limiting opportunities for growth and diversification. Furthermore, I am concerned about the impact of the proposed regulations abroad. The rules do not sufficiently address the reporting requirements for protocols run outside the United States and for users located outside the United States. This lack of clarity may lead to regulatory inconsistencies and potentially hinder the global competitiveness of U.S. investment advisers. Additionally, I am worried about regulatory inconsistency across various jurisdictions. While the proposed rule aims to enhance investor protections, it is crucial to consider potential discrepancies in regulatory practices among different jurisdictions. A lack of harmonization in standards could create unfair treatment for advisers operating in multiple jurisdictions and create unnecessary compliance burdens. Moreover, I would like to emphasize the need for reasonable alternatives. While the proposed safeguards are intended to strike a balance between investor protections and compliance costs, it is essential to allow for flexibility and consider alternative approaches that achieve the same objectives without placing an undue burden on investment advisers. Providing more options to achieve the desired outcomes can foster greater innovation and competition in the industry. Lastly, I urge the SEC to carefully consider the potential impact of the proposed rule on investor access to global investment opportunities. It is essential to strike a balance between safeguarding client assets and facilitating investor participation in global financial markets. Any limitations or unintended consequences that hinder investor access could undermine the overall goal of enhancing investor protections. In conclusion, I appreciate the SEC's efforts to strengthen safeguards for advisory client assets. However, I believe it is crucial to address the potential negative impact on investor access to digital assets and the need for regulatory consistency across jurisdictions. By incorporating reasonable alternatives and carefully considering the global impact, the SEC can craft a rule that achieves its objectives while preserving a fair and competitive landscape for investment advisers. Thank you for considering my concerns. Sincerely, Chuck