Oct. 25, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule titled "Safeguarding Advisory Client Assets". While I commend the SEC for seeking to enhance investor protections and address gaps in the custody rule, I have some concerns and issues regarding certain aspects of the rule proposals. In particular, I would like to highlight the lack of clarity on recordkeeping requirements for digital assets and the potential impact on the growing field of digital asset investments. Digital assets, such as cryptocurrencies, have emerged as a transformative force in the financial industry, leveraging blockchain technology to revolutionize traditional financial transactions. However, the regulatory environment surrounding these assets remains uncertain, creating challenges for market participants seeking to comply with the rules and safeguards put forth by the SEC. It is imperative that the proposed rule provides clear guidance on recordkeeping requirements for digital assets to ensure a level playing field and foster innovation in this rapidly evolving space. While the proposed rule acknowledges the application of the custody rule to digital assets, it falls short in providing specific guidance on how investment advisers should navigate the unique recordkeeping challenges associated with these assets. Digital assets require specialized storage and security measures to protect against cyber risks and ensure exclusive control. Without clear guidance on recordkeeping requirements, investment advisers may struggle to demonstrate compliance and face undue burdens in safeguarding client assets. To address this concern, I urge the SEC to work closely with industry experts and stakeholders to develop comprehensive and practical guidelines for recordkeeping of digital assets. The SEC should take into account the unique characteristics of blockchain technology and innovative custodial solutions that have emerged specifically to address the custody and protection of digital assets. By providing clarity and specificity in this area, the SEC can promote investor confidence and foster responsible innovation in the digital asset space. Furthermore, it is crucial for the SEC to strike the right balance between investor protections and the potential benefits of digital assets. The proposed rule should not stifle innovation or deter market participants from engaging in digital asset investments. Instead, it should create a regulatory framework that facilitates responsible growth and ensures adequate safeguards for investors. In conclusion, I appreciate the SEC's efforts to enhance investor protections through the proposed rule. However, it is essential to address the lack of clarity in recordkeeping requirements for digital assets to foster a regulatory environment that supports innovation while safeguarding investors. I urge the SEC to take into consideration the unique characteristics of digital assets and collaborate with industry experts to develop practical and comprehensive guidelines. It is my hope that through thoughtful and nuanced regulation, we can unlock the potential of digital assets while ensuring the highest standards of investor protection. Thank you for considering my comments. Sincerely, Rainer Winkler