Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to express my 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 the rule could inadvertently restrict access to emerging cryptocurrency technology, ultimately hindering progress and impacting the economy. Digital assets, such as cryptocurrency, have emerged as a transformative force in the financial industry, offering decentralized transactions, increased security, and greater financial inclusion. However, the proposed rule does not adequately consider the unique properties of cryptocurrency and may limit its potential benefits for investors and the economy as a whole. One major concern is the rule's application to crypto assets. The proposal's definition of assets and its requirements for custody fail to acknowledge the decentralized nature and technological complexities of digital assets. Cryptocurrencies, unlike traditional securities, exist purely in digital form and do not fit neatly into the traditional custody framework. Imposing restrictive requirements could discourage investment advisers from engaging with these assets and hinder innovation in the cryptocurrency industry. Additionally, the rule's recordkeeping and registration requirements may disproportionately burden firms dealing with digital assets. The rapidly evolving nature of blockchain technology and the proliferation of cryptocurrencies create a dynamic and nuanced environment. Compliance with strict recordkeeping requirements could pose significant challenges, particularly for smaller firms with limited resources. It is essential to strike a balance between oversight and innovation, allowing for responsible growth in the cryptocurrency industry. Furthermore, the proposed rule fails to acknowledge the potential economic benefits that digital assets can bring. By restricting access and imposing burdensome regulations, the SEC may inadvertently hold back progress and innovation, disadvantaging the US economy. It is crucial to consider the long-term economic implications and ensure that regulatory measures support the growth and development of the digital asset industry. In light of these concerns, I urge the SEC to reconsider how the regulatory requirements are applied to digital assets. Collaboration with industry experts, blockchain innovators, and stakeholders would help develop a more effective and practical framework. Embracing a flexible approach that balances investor protection and innovation will foster a conducive environment for economic growth and technological advancements. Thank you for considering my comments on this important matter. As a concerned citizen with a vested interest in the growth and prosperity of the digital asset industry, I believe it is crucial for regulators to enable access to emerging technologies that can benefit investors and the economy. I look forward to further discussions and collaboration on this topic. Sincerely, Paul Gilbert