Oct. 29, 2023
I am writing to provide my public comment on the proposed rule regarding the safeguarding of advisory client assets, as outlined in the above-referenced docket. I appreciate the opportunity to express my concerns and offer suggestions for improvement in order to address potential shortcomings within the proposed regulations. Firstly, I urge the Securities and Exchange Commission (SEC) to consider the significant privacy and security concerns associated with the custody of digital assets. In an increasingly digitized world, it is essential that investor assets are adequately protected from cyber threats and unauthorized access. The proposal fails to comprehensively address these concerns, potentially placing investors' assets at risk. Strong measures must be implemented to safeguard digital assets and ensure the privacy and security of client information. Furthermore, I would like to raise concerns regarding the impact of the proposed regulations on entities operating abroad. The regulations introduced in the proposal do not sufficiently limit reporting requirements for protocols run outside the United States nor take into account the specific needs and complexities faced by investors and investment advisers operating in foreign jurisdictions. One-size-fits-all reporting requirements may introduce operational burdens and costs for entities outside the United States, potentially hindering their ability to serve both domestic and international clients. It is crucial to strike a balance that promotes compliance while considering the unique circumstances faced by those operating abroad. Moreover, the implementation of the proposed rule should take into consideration its potential effects on global capital markets and competition. While investor protection is paramount, an overly burdensome regulatory framework may inadvertently impede the efficiency and competitiveness of the advisory industry, ultimately hampering capital formation. It is imperative that any new safeguards be designed in a manner that enhances investor protection without unduly stifling innovation and imposing excessive compliance costs on qualified custodians and investment advisers. In conclusion, I urge the SEC to substantively address the privacy and security concerns related to the custody of digital assets in its final rulemaking. Additionally, the SEC should reevaluate the reporting requirements for entities operating abroad, ensuring that they are proportionate and do not hinder the international reach of advisory services. Lastly, the SEC should reevaluate the impact of the proposed regulations on capital markets and competition to create a balanced regulatory environment that fosters both investor protection and economic growth. Thank you for considering my comments on the proposed rule. I trust that you will take these concerns into account during the rulemaking process to ensure that the final regulations strike an appropriate balance between investor protection, privacy, security, and the promotion of efficient capital markets.