Oct. 30, 2023
Securities and Exchange Commission 100 F Street NE Washington, DC 20549 Subject: Public Comment on "Safeguarding Advisory Client Assets" Proposal Dear Sir/Madam, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets" (Release No. IA-XXXX; File No. XXX-XXXXX) recently published by the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I believe certain aspects of the proposal require further consideration and revision, particularly in relation to digital assets or cryptocurrencies. The rapid rise of digital assets, such as cryptocurrencies, has transformed the financial industry by leveraging blockchain technology. However, the SEC's current proposal seems to inadequately consider the unique properties and intricate technological complexities of cryptocurrencies. The decentralized nature of these assets warrants a measured and nuanced approach to regulatory requirements. Digital assets pose distinct challenges that necessitate a tailored regulatory framework. Imposing impractical and burdensome regulatory requirements on investment advisers who engage with cryptocurrencies may stifle innovation and deter potential investors from participating in this emerging market. It is imperative for the SEC to take into account the characteristics of digital assets and adapt its regulations accordingly. To facilitate the responsible growth of the digital asset market, the SEC should prioritize efforts to educate both investors and investment advisers on the opportunities and risks associated with cryptocurrencies. This would ensure that investors are equipped with the necessary knowledge to make informed decisions, while consultants are provided with the tools and regulatory clarity to guide their clients appropriately. Furthermore, the lack of regulatory certainty surrounding cryptocurrencies has created an environment where investors and advisers face ambiguity and confusion. Clear guidelines and standards are needed to instill confidence and ensure that investors are adequately protected without stifling innovation and growth in this sector. The SEC should take a leadership role in setting the path forward for digital asset regulation, allowing the market to mature and thrive under a well-defined and proportionate regulatory framework. In summary, I urge the SEC to revisit the proposed rule and its implications for digital assets or cryptocurrencies. A collaborative and well-informed approach that balances investor protections with the need for regulatory flexibility is crucial. By considering the decentralized nature and technological complexities of digital assets, the SEC can develop a forward-thinking framework that encourages responsible innovation and bolsters investor confidence. Thank you for considering my comments. I look forward to a well-rounded dialogue on this matter and trust that the SEC will act in the best interests of both investors and the financial industry as a whole. Please let me know if there is any additional information or clarification I can provide to support my comments. Sincerely, John Chavez