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 understand the aim to enhance investor protections and address gaps in the custody rule, there are several areas of the proposal that warrant careful consideration and potential revision. Firstly, I would like to discuss the potential negative impact on investor access, particularly in relation to digital assets. The proposed rules may inadvertently restrict investor access to this emerging asset class. With the rapid growth and increasing popularity of cryptocurrencies and other digital assets, it is crucial that investors have the ability to participate and diversify their portfolios. Restrictive regulations could limit their opportunities and hinder the potential for growth and innovation in this space. Alternative solutions should be explored to provide a balance between investor protection and encouraging participation in the digital asset ecosystem. Another area of concern is privacy. While the proposed rules aim to enhance investor protections, we must also consider the privacy and safety associated with allowing numerous third parties access to sensitive financial data and personal information such as social security numbers. It is crucial to strike a balance between safeguarding client assets and protecting investor privacy. Strong controls and measures should be in place to ensure the security of personal information and mitigate the risk of potential misuse or data breaches. In addition to these specific concerns, there are broader considerations that warrant attention. The proposed rule and amendments have significant economic implications for investment advisers and their clients. It is important to carefully weigh the costs and benefits of the proposed requirements, taking into account the varying practices among investment advisers. The economic analysis provided by the SEC acknowledges these challenges as well. Furthermore, any regulatory requirements should aim to promote efficiency, competition, and capital formation. While investor protection is paramount, it is crucial to strike a balance that does not unduly hinder advisory services or create excessive compliance costs for qualified custodians. A thorough assessment of the potential impact on efficiency, competition, and capital formation is necessary to ensure that the proposed rules achieve their desired objectives without unintended consequences. I appreciate the opportunity to provide input on the proposed rule and appreciate the SEC's consideration of public comments. I encourage the SEC to carefully review the concerns raised in this comment and to seek alternative solutions that address the identified issues. It is crucial to strike a balance between investor protection and the preservation of investor access, privacy, and economic considerations. Thank you for your attention to this matter. Sincerely, Asi Hassan