Oct. 28, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule amendments outlined in the "Safeguarding Advisory Client Assets" proposal from the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have reservations about certain aspects of the proposed rule and its potential ramifications on the competitiveness of US companies and the regulatory challenges posed by digital assets. Potential Negative Impact on Competitiveness of US Companies: I am deeply concerned that the proposed rule amendments may unintentionally put US companies at a competitive disadvantage compared to their international counterparts. While it is important to safeguard client assets, excessive or overly burdensome regulations could result in increased compliance costs for investment advisers, which may hinder their ability to provide cost-effective services or positively impact their competitiveness. This could inadvertently lead to capital flight and loss of market share for US companies, undermining the SEC's objective of protecting investor interests. It is crucial to strike a balance between investor protection and the ability of US companies to remain globally competitive. Regulatory Challenges of Digital Assets: One area of significant concern regarding the proposed rule amendments is their application to digital assets or cryptocurrencies. The emergence of digital assets, built on blockchain technology, has transformed the finance landscape, offering new investment opportunities and challenges. However, the regulatory framework for digital assets is still evolving, leading to uncertainties for market participants and the SEC alike. The proposed rule should take these challenges into account by providing clarity on how investment advisers can effectively safeguard digital assets while ensuring compliance with existing regulations. Flexibility and adaptability are essential to nurture innovation while maintaining a robust investor protection framework. The SEC has a crucial role to play in striking the right balance between regulation and fostering innovation. With proper measures and tailored rules, the SEC can create an environment that preserves investor protection while encouraging technological advancements and economic growth in the digital asset space. I would like to take this opportunity to offer a few general questions regarding the proposal: How does the SEC intend to ensure that the proposed rule amendments do not inadvertently hinder the competitiveness of US companies in global markets? What concrete steps and guidelines will be put in place to address the regulatory challenges associated with digital assets, considering their unique characteristics and the evolving nature of the market? How does the SEC anticipate working with other regulatory bodies to harmonize regulations on digital assets, both domestically and internationally? Furthermore, please let me know if there are any other areas of concern that I could provide specific public comments on. I am eager to contribute meaningful feedback to help shape effective rules that protect investor interests without stifling innovation or the competitiveness of US companies. Thank you for considering my input on this important matter. I trust that the SEC will carefully evaluate these concerns and take them into account during the rulemaking process. Please do not hesitate to reach out if you require any further information or clarification. Yours sincerely, A Concerned U.S. Citizen