Oct. 28, 2023
Dear Securities and Exchange Commission, As a concerned U.S. Citizen, I am writing to express my thoughts and concerns regarding the proposed rule on Safeguarding Advisory Client Assets. While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I believe there are several areas that require further clarification and consideration. One key area that concerns me is the lack of clarity on the regulatory treatment of cross-chain transactions. With the rise of digital assets, such as cryptocurrency, built on blockchain technology, it is imperative that the SEC provides clear guidance on how these transactions will be regulated. The proposal, unfortunately, fails to address this issue, creating uncertainty for market participants. Digital assets have revolutionized the financial landscape, offering new opportunities for investment and capital formation. However, the regulatory uncertainties surrounding these assets pose challenges for both investors and industry participants. Without clear guidance, market participants may face undue risks and difficulties in complying with existing regulations. Therefore, I strongly urge the SEC to clarify its approach to cross-chain transactions and provide clear regulatory guidelines for digital assets. Furthermore, the economic analysis provided by the SEC acknowledges the benefits of the proposed rule, such as mitigating principal-agent problems and addressing conflicts of interest between investment advisers and clients. However, it is important to consider the potential unintended consequences and costs associated with compliance. The proposed rule imposes new compliance requirements on investment advisers, and while the intention is to enhance investor protections, it is crucial to assess the potential burden on small entities. The SEC has estimated a significant cost burden for advisers subject to the proposed rule, and it is essential to carefully evaluate whether these costs are justified. Additionally, I encourage the SEC to consider reasonable alternatives that could minimize the compliance burden without compromising investor protections. In conclusion, while I support the SEC's efforts to enhance investor protections and address gaps in the custody rule, there are certain aspects that require further clarification and consideration. Specifically, the lack of clarity on cross-chain transactions and the regulatory treatment of digital assets poses challenges and creates uncertainty in the market. Additionally, I urge the SEC to carefully assess the potential burden on small entities and explore reasonable alternatives to minimize compliance costs. Thank you for considering my comments. I believe that by addressing these concerns and ensuring clarity and fairness in the proposed rule, we can achieve a regulatory framework that protects investors while fostering innovation and growth within the advisory industry. Sincerely, A Concerned U.S. Citizen