Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While I understand the importance of enhancing investor protections and addressing gaps in the custody rule, I believe that certain aspects of the proposed rule may have a negative impact on investor access, particularly with regards to digital assets such as cryptocurrency. Digital assets, including cryptocurrencies built on blockchain technology, are transforming the financial industry and providing new opportunities for investors. However, these assets have been subject to regulatory uncertainties, making it challenging for investors to fully participate in this emerging asset class. The proposed rules, as currently outlined, may further restrict investor access to digital assets, potentially limiting their ability to diversify their portfolios and capitalize on the growth potential of this innovative asset class. While I acknowledge the need to protect investors from potential risks associated with digital assets, it is essential that regulatory measures strike a balance between investor protection and fostering innovation. The proposed rules' definitions and requirements for custodianship of digital assets are too restrictive and fail to adequately consider the unique characteristics and potential benefits of these assets. Additionally, the challenges in demonstrating exclusive control over digital assets highlighted in the proposed rule can further stifle investor access. The inherent decentralized nature of blockchain technology makes it difficult to differentiate between direct and indirect control, which may create unnecessary barriers for investment advisers and impact their ability to offer digital asset investment options to their clients. Furthermore, the proposed changes regarding the delivery of notice to clients may create additional burdens for investment advisers. While transparency and communication are critical, the proposed requirement to include custodian information and custodial account numbers in the notice may compromise the privacy and security of both the clients and the custodians involved. It is important to find a balance that facilitates transparency while safeguarding sensitive information. In light of these concerns, I urge the Securities and Exchange Commission to carefully reevaluate the proposed rules and their potential impact on investor access to digital assets. It is crucial to foster an environment that encourages innovation and ensures investor protection without unduly restricting access to the emerging digital asset class. I appreciate the SEC's efforts to enhance investor protections and address the evolving landscape of the advisory industry. As the regulatory landscape continues to evolve, I encourage the SEC to remain open to technological advancements and market developments, engaging with industry stakeholders to develop a regulatory framework that supports innovation, while minimizing unnecessary burdens for investment advisers and promoting investor access. Thank you for considering my comments on this important matter. Sincerely, Lemuel Boyer