Oct. 28, 2023
Public Comment on Regulations.gov Subject: Safeguarding Advisory Client Assets - Proposal by the Securities and Exchange Commission I am submitting this public comment to express my concerns regarding the proposed rule on safeguarding advisory client assets by the Securities and Exchange Commission (SEC). While I appreciate the aim of enhancing investor protections and addressing gaps in the custody rule, there are certain aspects of the proposed rule that require further clarification and consideration. One area of concern is the lack of clarity on the definition of digital assets. The proposal fails to provide clear guidance on what constitutes a digital asset, leading to confusion and potential misinterpretation. In an era where digital assets, like cryptocurrency, are transforming the financial landscape, it is imperative that regulations keep pace with technological advancements. Without a clear definition, investment advisers may find it challenging to comply with the requirements and safeguard these digital assets appropriately. Furthermore, the proposed rule raises concerns about encroaching on individual financial autonomy. As an investor, I value the freedom to make decisions regarding my own money. While I understand the need for investor protection and regulation, it is essential to strike a balance that does not overly restrict the choices individuals can make with their assets. It's crucial for the SEC to ensure that the proposed rule does not unduly restrict individuals' control over their digital assets and overall investment decisions. Additionally, the economic analysis provided in the proposal warrants closer examination. While the proposed rule aims to enhance investor protections and reduce asset loss risk, there should be a thorough evaluation of the potential costs and benefits for both investors and advisors. While compliance costs are necessary, the magnitude of these costs should be carefully considered, particularly for investment advisers who may already have robust control measures in place. A balanced approach that considers the economic effects on market efficiency, competition, and capital formation is crucial. Moreover, ensuring regulatory clarity and efficiency requires reasonable alternatives to be explored. The SEC should actively seek input from interested parties on alternative approaches that could achieve the same level of investor protection while minimizing unnecessary compliance burdens. Effective engagement with industry stakeholders can lead to well-rounded regulations that achieve their intended goals without stifling innovation. In conclusion, while I support the SEC's objectives of protecting investors and addressing gaps in safeguarding client assets, the proposed rule needs further refinement, particularly concerning the definition of digital assets and the preservation of individual financial autonomy. It is essential that the SEC carefully weigh the costs and benefits of the proposed rule, taking into account the economic impact on both investors and advisors. By pursuing a balanced and transparent approach, the SEC can ensure that the final rule strikes the right balance between protecting investors and fostering innovation in the digital asset space. Thank you for the opportunity to provide input on this important matter. Sincerely, Mark Rivera