Oct. 29, 2023
Dear Sir or Madam, I am writing to express my apprehensions about the Securities and Exchange Commission's (SEC) "Safeguarding Advisory Client Assets" proposal. While I acknowledge the SEC's efforts to strengthen investor safeguards, I have reservations about certain elements of the proposed rule that might extend beyond the SEC's regulatory mandate and encroach upon domains better regulated by other authorities. One key concern revolves around the treatment of digital assets or cryptocurrencies. In an increasingly digitized world, these assets have emerged as pivotal investment instruments, reshaping the financial landscape. However, the regulatory ambiguity surrounding them presents significant hurdles for market participants. It's important to recognize that the regulatory landscape for digital assets is still evolving, with various agencies overseeing different facets of this innovative technology. Consequently, the SEC's proposed rule should be mindful of potential overlaps with other regulatory frameworks, as a uniform approach might not be well-suited for the distinctive characteristics of these assets. Moreover, the regulatory obligations outlined in the proposal could impose substantial compliance costs on investment advisers and qualified custodians. These expenses might inadvertently impede competition or stifle industry innovation. It's imperative for the SEC to thoroughly consider the economic ramifications of these requirements, particularly for small entities already grappling with limited resources. I strongly suggest that the SEC collaborates with pertinent regulatory bodies to establish clear-cut guidelines, ensuring consistent and comprehensive supervision of digital assets. Such collaboration would not only address regulatory ambiguities but also foster innovation and progress within the burgeoning digital asset market. In conclusion, while I acknowledge the SEC's aims to fortify investor protection through this proposal, I urge the agency to contemplate potential overlaps with other regulatory entities and the distinctive attributes of digital assets. Striking a balance between investor protection and industry expansion is critical for the long-term prosperity of the market. Thank you for your consideration of my concerns. Sincerely, Noel