Oct. 29, 2023
Christopher John Dempsey 5410 Garden Arbor Dr. Lutz, FL 33558 October 29, 2023 Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-1090 Subject: Public Comment on "Safeguarding Advisory Client Assets" Proposal (File No. S7-22-22) Dear Sir/Madam, Thank you for the opportunity to provide feedback on the proposed rule regarding the safeguarding of advisory client assets. As an experienced investor and advocate for consumer protection in the financial services industry, I write to offer my comments and concerns on this important matter. First, I would like to raise concerns about the potential overreach of regulatory authority by the Securities and Exchange Commission (SEC). While it is admirable that the SEC seeks to enhance investor protections, there is a risk that the proposed rule exceeds the SEC's regulatory authority, encroaching on areas that should rightfully be regulated by other agencies. It is crucial that regulatory boundaries are clearly defined to avoid unintended consequences and overlapping jurisdiction. Specifically, I am concerned about the treatment of digital assets or crypto-assets within the proposed rule. Digital assets, such as cryptocurrencies, have experienced significant growth and have the potential to transform the financial industry. Yet, regulatory uncertainties continue to pose challenges for market participants. The proposed rule should carefully consider the unique characteristics of digital assets to ensure appropriate regulations, without stifling innovation or undermining the purpose of the rule. One potential unintended consequence of the proposed rule could be the discouragement of innovation in the digital asset space. The rapid pace of technological advancements requires a flexible regulatory framework that fosters innovation. Imposing stringent requirements without clear justifications may deter market participants from engaging in new and exciting opportunities, ultimately hindering the development of this nascent industry. Moreover, excessive regulations may reduce the transparency of digital asset transactions, contrary to the intended goals of the rule. It is essential to strike a balance between investor protection and maintaining open, transparent markets that attract participants. Overburdening digital asset transactions with onerous reporting requirements could undermine market efficiency and deter responsible market participants from entering or remaining in the market. Another concern is the potential competitive disadvantage faced by U.S. firms relative to their foreign counterparts. The proposed rule must carefully consider the global landscape in which market participants operate. Imposing stricter regulations on U.S. firms without equivalent regulations for foreign firms may lead to a loss of market share, jobs, and overall competitiveness in the international marketplace. It is crucial to maintain a level playing field to ensure fair competition among market participants. Confidentiality and privacy concerns also arise in the context of the proposed rule. The requirement for information collection, storage, or sharing raises significant privacy considerations. While protecting client assets is of utmost importance, it is equally crucial to ensure confidential and private information is appropriately safeguarded. The proposed rule should include robust safeguards and protocols to protect sensitive client information to maintain public trust and confidence. Finally, there is a need to avoid overlapping jurisdiction within the regulatory landscape. The proposed rule must carefully consider potential conflicts with existing regulations enforced by other regulatory bodies, such as the Internal Revenue Service (IRS). Clear coordination and cooperation between different regulatory bodies are vital to provide market participants with consistent and coherent regulatory guidance. Reducing regulatory overlap will not only enhance efficiency but also prevent duplicative and burdensome compliance requirements for market participants. In conclusion, while acknowledging the SEC's intent to enhance investor protections with the "Safeguarding Advisory Client Assets" proposal, it is important to carefully address potential issues of overreach, unintended consequences, competitive disadvantage, privacy concerns, and overlapping jurisdiction. Striking the right balance between regulation and innovation is crucial to promote the growth and development of the financial services industry and ensure robust consumer safeguards. Thank you for considering my comments and concerns on this important matter. I believe that thoughtful and well-informed regulations will ultimately benefit investors, market participants, and the broader economy. I welcome further discussions and stand ready to contribute to the public debate on this proposal or any other matters related to investor protection in the financial industry. Sincerely, Christopher John Dempsey