Oct. 30, 2023
Dear SEC, I am writing to share my concerns and issues regarding the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the aim to enhance investor protections and address gaps in the custody rule, I find that there are certain aspects of the proposal that require further clarity and consideration. Specifically, I would like to focus on the lack of clarity on the definition of digital assets. As we live in an increasingly digital age, digital assets, such as cryptocurrencies, have gained significant prominence and have transformed the landscape of finance. However, regulatory uncertainty around these assets presents challenges for both investment advisers and investors alike. The proposal fails to provide clear guidance on what constitutes a digital asset, which could lead to confusion and potential misinterpretation. Given that digital assets operate on blockchain technology and have unique characteristics, it is crucial to establish a clear definition that aligns with their nature. By failing to define digital assets adequately, the proposal leaves room for varied interpretations and inconsistent regulatory practices. This can impede the ability of investment advisers to validate compliance with the rule and may pose challenges for investors seeking clarity on the protections afforded to their digital assets. To address this concern, I recommend that the SEC provides a comprehensive definition of digital assets that encompasses their unique features and aligns with market realities. This definition should be open to public input to ensure a thorough and inclusive understanding. In addition to the lack of clarity on the definition of digital assets, I urge the SEC to consider the potential unintended consequences of the proposed rule. The dynamic and rapidly evolving nature of digital assets requires regulators to strike a delicate balance between investor protections and the facilitation of innovation and market growth. Furthermore, the proposal should take into account the diverse range of digital assets and their varying characteristics and risks. The SEC should consider whether blanket regulations would adequately address the nuances and complexities of different types of digital assets. Given the innovative nature of digital assets, it is crucial for the SEC to engage in a collaborative approach that leverages the expertise of both industry participants and regulators. This would allow for the formulation of rules that are forward-thinking, adaptable, and robust in addressing the unique challenges posed by these assets. In conclusion, I would like to emphasize the need for the SEC to provide clear guidance on the definition of digital assets within the proposed rule. Failing to do so may hinder innovation, create regulatory uncertainty, and prevent investment advisers from effectively safeguarding client assets. I appreciate the opportunity to provide input on this important matter and urge the SEC to carefully consider these concerns. Regulating digital assets in a manner that promotes innovation while protecting investors is crucial in maintaining the integrity and competitiveness of our financial markets. Thank you for your attention to this matter. Sincerely, Anke