Oct. 30, 2023
Public Comment on "Safeguarding Advisory Client Assets" Proposal Dear Securities and Exchange Commission, I am writing to express my concerns and objections regarding the proposed rule on the safeguarding of client assets by investment advisers. While I understand the SEC's aim to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the proposed rule may have negative consequences and hinder innovation in the tokenization of intellectual property assets. Additionally, I have serious concerns about the privacy and safety implications associated with allowing numerous third parties to have access to sensitive financial data and personal information. Firstly, I am troubled by the potential negative impact of the proposed rule on the tokenization of intellectual property assets. Tokenization has emerged as a powerful tool for the monetization of intellectual property and the promotion of innovation. By allowing creators and rights holders to tokenize their IP assets, they are provided with new opportunities for capital formation and instant liquidity. However, I am concerned that the proposed rule, with its expanded coverage and requirements, may impose unnecessary restrictions and burdens on this emerging field. Tokenization of intellectual property frequently involves a digital representation of the asset itself. By broadening the scope of the rule, the SEC risks stifling the growth of this innovative industry. Regulatory barriers, such as complex custodial obligations and compliance costs, could deter creators and investors alike from exploring the potential of tokenized intellectual property assets. Therefore, it is essential for the SEC to carefully consider the impact of the proposed rule on this growing sector and ensure that it enables, rather than hinders, innovation and economic growth. Furthermore, I have concerns about the privacy and safety implications of the proposed rule. The rule would require investment advisers to share detailed client information with custodians, including social security numbers and other sensitive financial data. While I understand the importance of safeguarding client assets, I urge the SEC to consider the potential risks and vulnerabilities associated with the mass collection and storage of this highly sensitive information. The proposed rule exposes clients to the increased risk of identity theft and data breaches. With the growing prevalence of cyberattacks and information breaches, it is essential that the SEC prioritize privacy and security concerns. The wide dissemination of personal financial data among various parties increases the likelihood of unauthorized access and malicious exploitation. Moreover, granting multiple third parties access to detailed and sensitive financial information compromises the privacy rights of clients. The proposed rule may necessitate exposure of personal financial circumstances to an unnecessarily large number of individuals, raising valid concerns about the potential misuse of this information. Therefore, I urge the SEC to strengthen privacy protections and consider alternative measures that can ensure the security of client assets without compromising individuals' privacy. In conclusion, I strongly believe that the proposed rule on the safeguarding of client assets may negatively impact the tokenization of intellectual property assets and raise significant privacy and security concerns. As such, I respectfully request the SEC to carefully reexamine the potential consequences of the proposed rule, taking into consideration the need for innovation, privacy protection, and risk mitigation strategies. Thank you for considering my comments and I look forward to further engagement in this matter. Sincerely, Kaiser Vanalm