Oct. 28, 2023
Dear Securities and Exchange Commission (SEC), I, A Concerned U.S. Citizen, am writing to express my concerns regarding the proposal "Safeguarding Advisory Client Assets." While I appreciate the efforts made by the Securities and Exchange Commission (SEC) to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the proposed rule may hinder international cooperation and coordination on digital asset regulation, leading to regulatory fragmentation. Digital assets, such as cryptocurrency, have emerged as a transformative force in the financial industry, underpinned by blockchain technology. These assets offer unique benefits, including increased efficiency, transparency, and accessibility. However, the regulatory landscape for digital assets remains uncertain, posing challenges for both investors and industry participants. The proposed rule addresses the application of the safeguarding requirements to digital assets and highlights challenges in demonstrating exclusive control. While it is crucial to ensure the protection of client assets in the digital realm, we must also consider the potential negative impact on international cooperation in regulating this emerging asset class. Regulatory harmonization and consistent global standards are essential for fostering innovation, promoting investor confidence, and safeguarding against illicit activities. By imposing unique custody requirements for digital assets, the SEC risks deviating from international norms and creating regulatory fragmentation. This fragmentation could impede cross-border cooperation, hinder market access for investors, and stifle the development of globally integrated digital asset markets. To avoid such unintended consequences, it is imperative that the SEC works collaboratively with international counterparts to develop standardized frameworks for the custody and safeguarding of digital assets. This collaboration should seek to streamline and align regulatory approaches across jurisdictions, striking a balance between investor protection and fostering innovation. Cooperation will enable regulators to share best practices, enhance information sharing, and collectively address the challenges posed by the rapidly evolving digital asset landscape. Furthermore, as cryptocurrencies continue to gain popularity, it is vital to approach regulatory oversight with nuance and flexibility. The unique characteristics of digital assets require regulators to balance investor protection with innovation. Overregulation could stifle technological advancements and drive talent and investment away from U.S. markets. I strongly urge the SEC to consider engaging in international forums to develop comprehensive and harmonized approaches to the custody and safeguarding of digital assets. By working collaboratively and promoting cross-border regulatory coordination, regulators can effectively address risks while supporting innovation, fostering economic growth, and preserving the competitive advantage of U.S. markets. In conclusion, I appreciate the SEC's focus on investor protection and efforts to address gaps in the custody rule. However, I urge the SEC to carefully consider the potential negative impact on international cooperation and coordination in regulating digital assets. Harmonization of regulatory frameworks across jurisdictions is vital to maintaining a level playing field and ensuring the efficiency and competitiveness of the global digital asset market. Thank you for considering my concerns. I strongly believe that through collaborative efforts and balanced regulation, we can achieve both investor protection and international cooperation in the fast-paced world of digital assets. Sincerely, A Concerned U.S. Citizen