Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to submit my public comment on the proposal "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have concerns regarding potential overreach of regulatory authority, specifically relating to digital assets or crypto. Digital assets, such as cryptocurrencies, have transformed the financial landscape with their innovative use of blockchain technology. However, regulatory uncertainties surrounding these assets pose significant challenges. I believe that the SEC's proposed rule unnecessarily departs from statute, creating ambiguity and hindering the growth and development of the digital asset industry. One of my primary concerns is the difficulty in obtaining information necessary for compliance with the proposed rule. The lack of clear guidelines and requirements regarding digital assets may result in regulatory inconsistencies and inhibit transparency. Without a streamlined and standardized process for obtaining information, compliance becomes burdensome for industry participants, particularly small businesses. Furthermore, the SEC's proposed rule seems to lack a thorough cost-benefit analysis. It is essential that any regulatory measure demonstrates its necessity and presents a compelling case for its benefits. In the case of the proposed rule, it appears that the potential economic costs for industry participants outweigh the benefits, particularly for small businesses. This imbalance in cost and benefit could hinder innovation and capital formation within the digital asset industry. I am also concerned about the proposed rule's potential impact on investor choice and access. The rules, as presented, fail to account for the diverse array of investor preferences and needs within the digital asset space. By imposing standardized requirements, the proposed rule limits investor choice, reducing the opportunity for market-driven price discovery and potentially stifling investment options. Moreover, the lack of empirical support for the proposed rule is troubling. Decisions that impact entire industries and investment strategies should be evidence-based, grounded in thorough analysis of industry dynamics and practices. Without sufficient data and research to support the proposed rules, concerns regarding their effectiveness and impact remain valid. Additionally, I believe the proposed rule exhibits conflicts with congressional intent and judicial doctrine. By implementing inflexible requirements without utilizing a phase-in period, the proposed rule fails to account for market dynamics and the potential impact on small businesses. Such an approach contradicts the intended goal of fostering innovation and facilitating market growth. In conclusion, I urge the Securities and Exchange Commission to reconsider the proposed rule's impact on the digital asset industry. The rules, as they stand, risk stifling innovation, reducing investor choice, and hampering market development. I recommend a more nuanced approach that considers the unique challenges and opportunities presented by digital assets, while also ensuring investor protection and regulatory oversight. Thank you for considering my comments. I appreciate the opportunity to participate in this important discussion. Sincerely,