Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide a public comment on the proposed rule "Safeguarding Advisory Client Assets." While I recognize the importance of investor protections and the need to address gaps in the custody rule, I have several concerns regarding the rule's treatment of cryptocurrency and its potential impact abroad. Firstly, the proposed rule does not adequately consider the unique properties of cryptocurrency. Cryptocurrencies are decentralized in nature, and their underlying technologies present complex challenges for regulatory oversight. Unfortunately, the current proposal fails to take into account these complexities, leading to impractical requirements that may hinder innovation and create undue burdens for investment advisers. Given the global nature of cryptocurrency, it is concerning that the proposed regulations do not sufficiently limit reporting requirements for protocols run outside the United States and for users located abroad. While it is important to ensure investor protection, it is equally important to foster an environment that allows for the growth and innovation of this emerging asset class. Restrictive reporting requirements may inadvertently stifle international participation and investment in the cryptocurrency market, potentially undermining its long-term potential for economic growth. I urge the SEC to carefully consider the unique properties of cryptocurrency and the global implications of the proposed rule. As the regulatory landscape continues to evolve, greater collaboration and coordination with international counterparts is necessary to ensure a balanced approach that protects investors while fostering innovation. Thank you for the opportunity to provide my input on this important matter. Sincerely, Patrick Magrath