Oct. 25, 2023
Dear Securities and Exchange Commission, I am writing to provide my comments on the proposed rule titled "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I am concerned about the insufficient consideration of blockchain interoperability and the potential impact on digital assets or cryptocurrencies. Firstly, I would like to address the issue of insufficient consideration of blockchain interoperability. The proposed rule does not adequately highlight the importance of cross-chain asset management and the benefits it can bring to the advisory industry. As the use of blockchain technology continues to expand, it is crucial for regulators to understand and address the challenges associated with interoperability between different blockchain networks. Blockchain interoperability allows for the seamless movement of assets between different blockchains, enabling more efficient and flexible asset management. Without proper considerations for interoperability, the potential benefits of cross-chain asset management may be hindered. It is important for the SEC to engage with industry experts and stakeholders to better understand the technical challenges and potential solutions in this area, ensuring that the proposed rule is forward-looking and adaptable to emerging technologies. Furthermore, I would like to express my concerns about the treatment of digital assets or cryptocurrencies in the proposed rule. Digital assets, such as cryptocurrencies, have been transforming the landscape of finance, providing opportunities for innovation and financial inclusion. However, regulatory uncertainties surrounding these assets have posed challenges for both market participants and regulators. The proposed rule should provide greater clarity and guidance on how investment advisers can effectively safeguard digital assets within the existing regulatory framework. It is crucial to strike a balance between investor protection and fostering innovation in this rapidly evolving space. The SEC should engage with industry stakeholders to ensure that the proposed rule adequately addresses the unique aspects of digital asset custody, taking into account security measures, compliance requirements, and technological advancements. In conclusion, I urge the SEC to give due consideration to the importance of blockchain interoperability and the challenges associated with digital asset custody. Engaging with industry stakeholders and experts in these areas will help ensure that the proposed rule is comprehensive, forward-looking, and adaptable to emerging technologies. By fostering an environment that supports innovation while maintaining investor protection, the SEC can contribute to the growth and stability of the advisory industry in the digital age. Thank you for considering my comments. Sincerely, Rainer Winkler