Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" and express concerns regarding the inadequate consideration of the unique properties of cryptocurrency. While the Securities and Exchange Commission aims to enhance investor protections and address gaps in the custody rule, it is crucial for the regulations to comprehensively take into account the decentralized nature and technological complexities of cryptocurrency. Digital assets, such as cryptocurrency, have emerged as a transformative force in the financial industry. With the rise of blockchain technology, the traditional notions of custody and control have been revolutionized. However, the proposed rule fails to sufficiently recognize and address the regulatory uncertainties surrounding cryptocurrencies, which introduces significant challenges and potential pitfalls. One of my main concerns lies in the unclear rules regarding the application of the proposed safeguards to cryptocurrency assets. The decentralized nature of cryptocurrencies, coupled with their unique custody arrangements, makes it difficult to implement the same level of control and oversight as traditional assets. The lack of clarity in the rule exacerbates this challenge, potentially leading to regulatory requirements that are impractical, burdensome, or even unworkable in the context of cryptocurrency custody. Furthermore, the proposed rule's focus on demonstrating exclusive control over client cryptocurrency assets presents additional hurdles for investment advisers. The malleable and borderless nature of cryptocurrency raises questions about how exclusive control can be effectively proven. The absence of clear guidelines or best practices in the proposed rule adds to the uncertainty and can potentially hinder the growth and adoption of cryptocurrencies within the investment advisory industry. It is crucial for the Securities and Exchange Commission to engage in a more nuanced conversation about crypto assets and recognize the need for tailored regulations that appropriately address their unique properties. This could involve working closely with industry participants and experts to develop guidelines and standards specific to digital assets, creating a framework that balances investor protection and innovation in the cryptocurrency space. In conclusion, I urge the Securities and Exchange Commission to reevaluate the proposed rule regarding safeguarding advisory client assets, specifically concerning the treatment of cryptocurrency. It is essential to foster an environment that encourages innovation and development in the digital asset space, while maintaining investor protections and addressing any potential risks. By providing clear and practical guidelines for the custody and safeguarding of cryptocurrency assets, the SEC can ensure that investment advisers can responsibly engage with these emerging technologies for the benefit of both clients and the broader financial ecosystem. Thank you for considering my comments on this matter. Sincerely, Concerned Citezen