Oct. 27, 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 appreciate the efforts of the SEC to enhance investor protections and address gaps in the custody rule, I have several concerns regarding the lack of clarity on the definition of digital assets and the potential implications for the industry. Digital assets, particularly cryptocurrencies, have emerged as a transformative force in the financial industry. As the global landscape surrounding these assets continues to evolve, it is imperative that the United States establishes itself as a leader in this space. It is crucial to strike a balance between protecting investors and fostering innovation. The regulatory framework must be comprehensive and forward-thinking to facilitate the growth of the digital asset market. However, the proposed rule fails to provide clear guidance on what constitutes a digital asset, leading to confusion and potential misinterpretation among investment advisers. In order for the United States to maintain its position as a leader in innovation, it is essential that regulations provide clarity and certainty. Excessive restraints could hinder the growth of the digital asset industry and impede its ability to compete on a global scale. Additionally, the lack of clarity on the treatment of digital assets in the proposed rule could result in inconsistent regulatory enforcement and potentially expose investors to unnecessary risks. It is of utmost importance to provide a robust regulatory framework that protects investors while allowing for market forces to shape the industry. Overregulation can stifle innovation and prevent companies from developing new and secure custody solutions for digital assets. To address these concerns, I urge the SEC to collaborate closely with industry experts and stakeholders to develop a clear and comprehensive framework for the treatment of digital assets within the proposed rule. By incorporating input from those actively involved in the digital asset market, the SEC can ensure that the regulatory framework is practical, effective, and reflective of market realities. Moreover, the SEC should consider the unique risks and mitigating factors associated with digital assets when establishing regulatory requirements. Recognizing the importance of secure and auditable blockchain technology for the custody and safekeeping of digital assets is crucial. Regulations should be based on a thorough understanding of the technology and its potential to enhance investor protections while avoiding unnecessary burdens on investment advisers. In conclusion, while I commend the SEC for its commitment to enhancing investor protections, I emphasize the need for clarity and a balanced approach in the regulation of digital assets within the proposed rule. The United States has the opportunity to be a global leader in this space, and it is essential to let the current market grow on its own without overly restrictive restraints. Thank you for considering my comments. I believe that by fostering innovation and providing clear regulatory guidance, the SEC can best protect investors and ensure the growth of the digital asset industry in the United States. Sincerely, Javier Setovich