Oct. 28, 2023
Dear Sir/Madam, I am writing to offer my public comment on the proposed rule "Safeguarding Advisory Client Assets" from the Securities and Exchange Commission. While I appreciate the SEC's efforts to enhance investor protections, there are several glaring concerns with the proposed rule that I would like to address. Firstly, the lack of clear guidance on how exchanges should comply with market integrity standards is troubling. Considering the decentralized nature of blockchain transactions, it is essential for the SEC to provide precise instructions in this regard. Without clarity and guidance, exchanges may struggle to ensure market integrity, which could have dire consequences for investor confidence. Furthermore, the proposed rule's use of poorly defined terms such as "platform," "software," and "ledger" leaves ample room for interpretation. This vagueness can lead to confusion and uncertainty among investment advisers and other market participants. It is imperative that the SEC provides precise definitions for these terms to promote consistent and effective implementation of the rule. Moreover, the inaccurate definitions of terms like "wallet" and "validator" only serve to exacerbate the confusion. Straying from their customary usage does a disservice to investment advisers attempting to comply with the rule accurately. The SEC should rectify these definitions to align with industry-standard understanding. While I understand the desire to enhance investor protections and safeguard client assets, the proposed rule's complexity and interpretation challenges create an unnecessary compliance burden for investment advisers. This burden disproportionately affects small advisers and could hinder their ability to provide effective services. Striking a balance between investor protection and the sustainability of the advisory industry must be a priority to maintain a healthy market. Furthermore, the economic analysis provided by the SEC acknowledges the potential increase in compliance costs for investment advisers. It is crucial to thoroughly assess the impact of these costs on advisory services, competition, and capital formation. Achieving a harmonious relationship between investor protection and sustainable industry practices is paramount to fostering a healthy and efficient market. In conclusion, I urge the SEC to seriously address the concerns raised in this public comment. Precise guidance on compliance with market integrity standards, unambiguous definitions of key terms, and a thorough evaluation of the compliance burden on investment advisers are imperative for the successful implementation of the proposed rule. By doing so, we can ensure investor protections are enhanced without unjustly burdening market participants. Thank you for considering my views. I appreciate the opportunity to provide input on this matter. If you require any further clarification or if there are additional areas of concern that I can address, please do not hesitate to reach out to me. Sincerely, A Concerned U.S. Citizen