Oct. 28, 2023
Dear Securities and Exchange Commission, As a concerned U.S. citizen, I am writing to express my reservations about the proposed rule titled "Safeguarding Advisory Client Assets." While I understand the intention behind this rule is to enhance investor protections, there are areas where it seems that the SEC may be overstepping its regulatory authority, especially in regards to digital assets or crypto. Digital assets, such as cryptocurrencies, are a rapidly evolving aspect of the financial industry, driven by advancements in blockchain technology. However, the regulatory landscape surrounding these assets is still in its infancy, with many uncertainties and challenges. It is crucial that any regulatory measures taken in this space are deliberate, balanced, and mindful of the potential impact on innovation and technological growth. The proposed rule, as currently outlined, raises concerns about the SEC's jurisdiction in regulating digital assets. By expanding the coverage to include a broader range of investments held in a client's account, including digital assets with concerns like custody, the SEC may be encroaching on areas that should be regulated by other agencies with specialized knowledge in this field. The scope of the rule should be carefully scrutinized to ensure that it does not inhibit the development and adoption of digital assets in a responsible manner. Regulatory uncertainties and burdensome compliance requirements could impede the growth of innovative technologies, limiting the potential benefits they can bring to investors and the wider financial landscape. Furthermore, the proposed rule's lack of clarity regarding the application of the rule to crypto assets and challenges in demonstrating exclusive control raises concerns. The SEC needs to provide clear guidelines and definitions, taking into account the characteristics and unique nature of digital assets, rather than applying traditional custody rules without suitable adaptation. I urge the SEC to collaborate with other relevant regulatory bodies, such as the Commodity Futures Trading Commission (CFTC), to develop a coordinated and comprehensive regulatory framework for digital assets. This collaboration would allow for a balanced and informed approach to safeguarding client assets while fostering innovation and ensuring investor protection. In conclusion, while I appreciate the SEC's efforts to enhance investor protections through the "Safeguarding Advisory Client Assets" proposal, I believe caution needs to be exercised in the regulation of digital assets. It is important to strike the right balance between safeguarding client assets and nurturing the growth of emerging technologies. I encourage the SEC to work in collaboration with other regulatory authorities to develop a tailored and effective regulatory framework for digital assets. Thank you for considering my concerns as part of the public comment process. I also welcome the opportunity to ask any general questions related to the proposal or offer further input on other areas of concern. Sincerely, A Concerned U.S. Citizen