Oct. 30, 2023
To Whom It May Concern: I am writing to comment on the proposed custody rules for investment advisers, specifically to request urgent guidance on the regulatory classification of digital assets. There is currently tremendous ambiguity as to whether certain digital assets are considered securities, commodities, currencies, or an altogether new asset class. This uncertainty poses major challenges for advisers attempting to analyze their responsibilities and duties under the new custody rules. Many innovative blockchain-based assets have hybrid qualities spanning multiple traditional categories. With no clear framework to determine the classification of hundreds of unique digital assets, advisers could inadvertently mis-categorize assets and fail to comply with the appropriate rules. This poses unnecessary legal, regulatory, and security risks to firms trying to act in good faith. Therefore, I strongly suggest the SEC make clarifying the regulatory status of major existing digital assets a top priority. Providing unambiguous public guidance and a transparent classification methodology is essential for the SEC to modernize oversight while still encouraging responsible innovation. Expecting advisers to comply with dramatically expanded rules without clear definitions of key terms is unreasonable. I appreciate the SEC engaging with novel technologies and welcome ongoing discussion about tailoring regulations to the digital assets ecosystem. But resolving this pervasive uncertainty is a prerequisite to effectively adapting regulatory frameworks without inadvertently chilling promising innovations. Thank you for your dedicated work. Kind regards, Christopher Norland