Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets". While I appreciate the SEC's goal of enhancing investor protections and addressing gaps in the custody rule, there are several concerns I wish to bring to your attention. Firstly, there is a potential overreach of regulatory authority with this proposed rule. It appears that the SEC may be encroaching on areas that should be regulated by other agencies. It is crucial to maintain clear and defined boundaries to avoid redundant regulation and potential conflicts with other regulatory bodies. Furthermore, the impact abroad has not been adequately addressed in the proposed regulations. The reporting requirements for protocols run outside the US and for users outside the US should be limited to avoid undue burden on international entities. It is essential to consider the global nature of the financial industry and its diverse regulatory frameworks. Additionally, I have concerns about the inadequate consideration of the unique properties of cryptocurrency. The proposed rule fails to account for the decentralized nature and technological complexities of cryptocurrency, leading to impractical regulatory requirements. It is crucial to recognize the distinct characteristics of this evolving asset class and develop regulations that are practical and effective in safeguarding investor interests while fostering innovation. I urge the SEC to carefully evaluate these concerns and ensure that the proposed rule strikes a balance between investor protection and regulatory efficiency. It is essential to avoid regulatory overreach and unintended consequences that could stifle entrepreneurship and investment in emerging technologies. Thank you for the opportunity to provide my public comment. I appreciate the SEC's commitment to transparency and soliciting public input. If there are any additional areas of concern or if you have any questions, please do not hesitate to reach out. Sincerely, Patrick Magrath