Oct. 29, 2023
Securities and Exchange Commission 10/29/2023 100 F Street, NE Washington, DC 20549 Subject: Public Comment on Proposed Rule "Safeguarding Advisory Client Assets" Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" (the Proposal), which seeks to enhance investor protections and address gaps in the custody rule for investment advisers. As a concerned individual and a stakeholder in the emerging digital asset space, I would like to express my concerns regarding the unequal treatment of different types of digital assets under the proposed rules. The Proposal, while aiming to modernize regulations, falls short in providing consistent treatment for various digital assets. It is essential that the Securities and Exchange Commission (SEC) exhibit leadership and provide regulatory clarity to address existing uncertainties surrounding digital assets like cryptocurrencies, which are built on blockchain technology and have the potential to transform the financial industry. One of the major issues with the Proposal is its inconsistent treatment of different types of digital assets. The definition of assets in the proposed rule should be updated to explicitly include digital assets, as the current wording leaves room for confusion and potential regulatory arbitrage. Failing to provide clear guidelines for the classification and treatment of such assets undermines the very purpose of the Proposal, which is to enhance investor protections. Additionally, the Proposal lacks guidance on how the rule applies to digital assets that are custodied through private keys and blockchain technology. The unique nature of these digital assets requires innovative solutions, such as robust security measures and risk-based assessments, rather than trying to fit them into traditional custodial frameworks. The SEC should collaborate with industry experts and digital asset custodians to develop practical solutions that ensure the safe and secure custody of these assets. Furthermore, the Proposal should acknowledge the rapid pace of technological advancements and the evolving nature of digital assets. It is important to adopt a forward-thinking approach that can accommodate future innovations in the digital asset space. The Proposal should account for the potential benefits and risks associated with emerging technologies, without stifling innovation or creating unnecessary burdens for market participants. To address these concerns, I urge the SEC to conduct a comprehensive review of the proposed rule's treatment of digital assets and provide further guidance on their classification and treatment. The SEC should also engage with industry stakeholders, including digital asset custodians, to gain a deeper understanding of the unique challenges and opportunities in this rapidly evolving field. In conclusion, while I support the SEC's efforts to enhance investor protections through the Proposal, I strongly urge the Commission to address the unequal treatment of different types of digital assets and provide clear and consistent guidelines for their custody and safeguarding. By embracing innovation and creating a supportive regulatory environment, the SEC can foster the growth of the digital asset industry while safeguarding the interests of investors. Thank you for considering my comments. I look forward to the SEC's continued efforts in shaping a regulatory framework that promotes fair and transparent markets while fostering innovation. Sincerely, Tim Jones Jr. Sent with Proton Mail secure email.