Oct. 28, 2023
Dear Sir/Madam, I am writing to express my concerns regarding the proposed rule on Safeguarding Advisory Client Assets by the Securities and Exchange Commission (SEC). As a concerned U.S. citizen, I believe it is crucial to address certain issues related to the lack of clarity on the definition of digital assets and the potential privacy and safety risks associated with the proposal. Firstly, I would like to raise my concern about the lack of clarity in the proposal regarding the definition of digital assets. The advancement of technology has introduced new investment opportunities and challenges in the form of digital assets. However, the proposal fails to provide clear guidance on what constitutes a digital asset. This ambiguity opens the door for potential misinterpretation and confusion among investment advisers, potentially leaving investors at risk. To ensure robust investor protection, it is essential for the SEC to establish a precise and comprehensive definition of digital assets. This definition should encompass various virtual currencies, utility tokens, security tokens, and other emerging digital financial instruments. Providing a clear understanding of digital assets will facilitate accurate reporting, compliance, and oversight procedures, ensuring that both investment advisers and investors are aware of their obligations and rights. Secondly, I would like to address the issue of privacy and safety associated with sharing sensitive financial data and personal information with a wide range of third parties. The proposed rule requires investment advisers to provide detailed information about custodians, including custodial account numbers, potentially endangering the privacy and security of clients' sensitive financial information. While acknowledging the importance of transparency and accountability, it is crucial to strike a balance between these objectives and preserving individuals' privacy rights. The proposed rule should incorporate measures to safeguard personally identifiable information (PII) and financial data. These safeguards might include restrictions on the disclosure of account numbers, implementing secure data encryption protocols, and minimizing the number of parties with access to such information. Additionally, the SEC needs to ensure robust cybersecurity measures are in place to protect against potential data breaches and unauthorized access to sensitive client information. By adopting best practices in data protection, including encryption, firewalls, and regular vulnerability assessments, the SEC can instill confidence among investors, assuring them that their private information is secure. Furthermore, the SEC should clearly define the responsibilities and liabilities of all parties involved in handling client information, emphasizing the need for third-party custodians to uphold strict privacy and security standards. This will ensure that all entities entrusted with investor data, including investment advisers and custodians, are held accountable for any breaches or misuses of client information. In conclusion, it is crucial for the SEC to address the lack of clarity surrounding the definition of digital assets and take steps to safeguard privacy and safety concerns associated with sharing sensitive financial data. By strengthening the regulatory framework around digital assets and established safeguards for privacy and cybersecurity, the SEC can enhance investor protection and maintain trust within the advisory industry. Thank you for considering my concerns. I strongly urge the SEC to carefully review and address these issues to ensure the proposed rule fulfills its intended objective of safeguarding advisory client assets while respecting privacy rights. Sincerely, A Concerned U.S. Citizen