Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to provide my thoughts and concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While the intention of enhancing investor protections is commendable, I believe that there are certain aspects of the rule that require further consideration and evaluation. In particular, I am concerned about the inadequate consideration of the unique properties of cryptocurrency and the potential impact of government overreach. Firstly, I would like to address the issue of cryptocurrency. The proposed rule fails to adequately consider the decentralized nature and technological complexities of cryptocurrency. By applying a one-size-fits-all approach to the safeguarding of client assets, the rule imposes impractical regulatory requirements on investment advisers dealing with digital assets. This neglects the fundamental differences between traditional custodial assets and cryptocurrencies, which operate on blockchain technology and have their security mechanisms in place. It is important to recognize that custodial solutions adopted by the cryptocurrency industry often provide robust security measures, such as multi-signature wallets and cold storage techniques. Therefore, imposing additional burdens on advisers dealing with cryptocurrency assets may hinder innovation and development in this rapidly evolving sector. Furthermore, I am concerned about the potential for government overreach through the insertion of unnecessary regulations. While investor protection is of paramount importance, we must strike a balance that allows for innovation and market growth. Excessive regulatory requirements can stifle competition and deter new players from entering the market. It is crucial that any regulations put forth by the SEC are grounded in a thorough cost-benefit analysis and prioritize efficient market functioning. In light of these concerns, I urge the SEC to review the proposed rule and consider alternative measures that can achieve the goal of investor protection while accommodating the unique characteristics of cryptocurrency. This may involve working closely with industry participants and seeking their input to create a regulatory framework that ensures the safety of client assets without stifling innovation or imposing unnecessary burdens on advisers. Additionally, I appreciate the SEC's efforts to incorporate feedback through this public comment process. As a concerned citizen, I encourage the SEC to meticulously evaluate all comments received and take them into account when finalizing the rule. Furthermore, I would like to express my support for the withdrawal of certain staff no-action letters and statements regarding the custody rule that may be outdated or no longer relevant. Maintaining a dynamic and adaptable regulatory framework is essential in a rapidly evolving financial landscape. In conclusion, while the "Safeguarding Advisory Client Assets" proposal aims to enhance investor protections, it is essential to consider the unique properties of cryptocurrency and guard against government overreach. By engaging in open dialogue with industry participants, the SEC can refine and create a rule that ensures the safety of client assets while fostering innovation and market growth. Thank you for considering my concerns and for providing the opportunity to participate in the public comment process.