Oct. 30, 2023
Edward George [REDACTED] 10/29/2023 Securities and Exchange Commission 100 F Street NE Washington, DC 20549 Re: Safeguarding Advisory Client Assets (File Number: [S7-04-23]) Dear Sir/Madam, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" issued 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 have some concerns regarding the implications of this proposal, particularly in relation to digital assets or cryptocurrency. Firstly, I would like to emphasize the need for the SEC to carefully consider the unique properties of cryptocurrency in the implementation of regulatory requirements. The decentralized nature and technological complexities of digital assets significantly differ from traditional securities, and it is crucial that the SEC takes these differences into account when formulating rules. Failure to adequately consider the specificities of cryptocurrency could result in impractical regulatory requirements that hinder innovation and the development of this emerging asset class. Additionally, the proposed rule should make provisions for mitigating the operational challenges faced by investment advisers when it comes to custody of digital assets. Given the complex nature of the cryptographic keys used to access and control digital assets, exclusive control, as outlined in the proposal, often presents significant challenges. The SEC should provide more guidance on how investment advisers can demonstrate adequate safeguards for digital assets while still ensuring investor protection. This will help prevent potential regulatory ambiguity and encourage responsible adoption of cryptocurrency within the investment adviser ecosystem. Furthermore, I believe that the proposed rule could impose an excessive compliance burden and unnecessary costs on investment advisers dealing with digital assets. The rapidly evolving nature of the cryptocurrency market necessitates adaptability and agility in complying with regulatory requirements. It is imperative for the SEC to strike a balance between investor protection and fostering innovation in the digital asset space. Imposing overly burdensome compliance obligations may deter investment advisers from offering digital asset services, disadvantaging both industry participants and investors seeking exposure to this asset class. Finally, I would like to urge the SEC to engage in ongoing dialogue with industry experts, market participants, and other relevant stakeholders to gain further insight into the unique challenges and potential benefits that digital assets present. It is crucial to collaboratively work towards developing a regulatory framework that ensures investor protection while facilitating the growth and innovation of this burgeoning industry. In conclusion, I appreciate the SEC's dedication to safeguarding client assets, but I strongly encourage the Commission to give further consideration to the unique properties and challenges posed by digital assets. It is essential to strike a balance between regulatory oversight and the encouragement of responsible innovation, ensuring that the regulatory framework fosters investor protection while promoting growth and development within the digital asset space. Thank you for considering my comments on this important matter. I trust that the SEC will carefully evaluate the concerns raised by stakeholders in order to develop a balanced and effective regulatory framework for the safeguarding of client assets. Should you require any further information or clarification, please do not hesitate to contact me at alieneddirecords@gmail.com. Sincerely, Edward George