Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets". While I acknowledge the need to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the proposed rule may potentially exceed the SEC's regulatory authority, encroaching on areas that should be regulated by other agencies. Specifically, I am concerned about the SEC's approach towards digital assets or cryptocurrencies. The proposed rule acknowledges the challenges posed by regulatory uncertainties in this rapidly evolving space. However, it is essential to strike a balance between safeguarding client assets and promoting innovation in the financial industry. Digital assets like cryptocurrencies, built on blockchain technology, have the potential to transform finance and provide investors with new opportunities. However, it is important to recognize the unique characteristics of these assets and establish appropriate regulations that facilitate growth while protecting investors. The proposed rule seeks to address the application of the custody rule to crypto assets and challenges in demonstrating exclusive control. While it is crucial to ensure the protection of client assets in this context, it is equally important to avoid stifling innovation with overly burdensome regulations. The SEC should collaborate with other relevant regulatory bodies that specialize in the regulation of digital assets to develop a comprehensive framework that fosters growth and investor confidence in this emerging space. Furthermore, it is imperative to consider the global nature of digital assets and the potential impact of overly restrictive regulations on global competitiveness. The SEC should strive to strike a balance between investor protection and maintaining a conducive regulatory environment that attracts digital asset innovators and businesses to the United States. I urge the SEC to collaborate with stakeholders, including industry experts and innovators, to establish a comprehensive regulatory framework for digital assets. This framework should address investor protection concerns while fostering innovation and ensuring the United States remains a leader in the global digital asset ecosystem. Thank you for considering my comments on the proposed rule. I encourage the SEC to carefully evaluate the potential overreach of regulatory authority and develop a balanced approach that addresses the unique challenges and opportunities presented by digital assets. Sincerely, Zachary Esquivel