Oct. 30, 2023
Dear Secretary, I am writing to provide a public comment on the proposed rule "Safeguarding Advisory Client Assets" issued by the Securities and Exchange Commission. As an individual investor and advocate for privacy rights, I have several concerns regarding the proposed rule and its potential impact on investor protections, specifically in relation to the unique properties of cryptocurrency and the privacy risks associated with the increased disclosure of sensitive financial data. Firstly, I question whether the SEC has adequately considered the unique nature of cryptocurrency and the technological complexities it entails. Cryptocurrencies operate on decentralized networks, utilizing blockchain technology to ensure transparency, security, and immutability. By their very nature, they fundamentally differ from traditional custodial assets. However, the proposed rule seems to treat cryptocurrency on par with other assets held by investment advisers, without taking into account its distinctive properties. Imposing the same stringent requirements on cryptocurrency as on traditional custodial assets could potentially lead to impractical and burdensome compliance measures. For example, the proposed rule discusses the challenges in demonstrating exclusive control over crypto assets. Given that control often resides in private cryptographic keys held by individual investors, requiring advisers to maintain exclusive control would necessitate accessing investors' private keys, compromising the security and privacy of cryptocurrency holders. This is particularly concerning as cryptography is a fundamental element in securing the integrity and privacy of digital assets. Additionally, I would like to express my concerns about privacy and the safety of sensitive financial data arising from the proposed rule. The rule requires investment advisers to disclose custodian information, including custodial account numbers, to clients in writing. While I understand the intention of providing transparency and oversight, this heightened level of disclosure also exposes investors to potential privacy risks. The proliferation of sensitive financial data, including custodian information and account numbers, increases the surface area for vulnerabilities and potential misconduct. This information, if mishandled or obtained by malicious actors, could lead to identity theft and financial fraud. In an era where data breaches are increasingly prevalent, it is crucial to strike a balance between transparency and safeguarding investors' privacy. Moreover, requiring advisers to disclose sensitive data to clients opens the door for coercive or fraudulent practices by third parties. Various scams, phishing attempts, and social engineering attacks rely on gathering information about individuals' financial holdings and accounts. By mandating such thorough disclosures, the proposed rule could inadvertently expose investors to increased risk. In light of these concerns, I urge the SEC to take into account the unique nature of cryptocurrency when formulating regulations. Disregarding the decentralized nature and technological complexities of cryptocurrency, and imposing impractical regulatory requirements, risks stifling innovation within this rapidly evolving space and hindering investor participation in digital assets. Furthermore, I implore the SEC to carefully consider the privacy and safety risks associated with the increased disclosure of sensitive financial data. While transparency is essential, it should be balanced with the need to protect investors' privacy and ensure robust security measures to prevent unauthorized access and misuse. Mr. Secretary, I respectfully request that the SEC gives due consideration to the concerns raised regarding the treatment of cryptocurrency and the privacy risks associated with heightened disclosure requirements. Crafting regulatory measures that adequately address the unique properties of cryptocurrency, while protecting investor privacy, will result in more effective and balanced investor protections. Thank you for the opportunity to submit this public comment, and I hope that my concerns are taken into account during the rule making process. Sincerely, Landen Miller