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 appreciate the Securities and Exchange Commission's efforts to enhance investor protections and address gaps in the custody rule, I believe there are certain aspects of the proposed rule that may exceed your regulatory authority, potentially encroaching on areas that should be regulated by other agencies. One key area of concern is the impact of these reporting requirements on small businesses. As a small business owner myself, I understand the burden that additional compliance measures can place on limited resources. The proposed rule would require small businesses and start-ups, who would not otherwise be required to track personal identifiable information, to implement costly tracking procedures. These additional costs could put these projects at a disadvantage and potentially stifle innovation within the financial advisory industry. Furthermore, I worry about the potential negative effect the proposed regulations could have on innovation within the emerging digital asset sector. The SEC's regulatory framework needs to strike a careful balance between tax compliance and fostering growth and development in this rapidly evolving industry. It is essential to consider alternative approaches that prioritize innovation without compromising investor protections. Additionally, I urge the Securities and Exchange Commission to carefully consider the economic impact of the proposed rule. While the rule aims to enhance investor protections, it is crucial to ensure that the benefits outweigh the costs, particularly for small businesses. The estimated burden and cost associated with implementing the proposed rule may disproportionately affect small advisers who may struggle to comply with additional reporting and compliance requirements. In conclusion, I appreciate the SEC's efforts in proposing rule amendments to enhance the safeguarding of client assets. However, I encourage the Commission to carefully consider the potential overreach of regulatory authority, the impact on small businesses, and the potential negative effect on innovation. By seeking alternative approaches that balance tax compliance and growth, we can foster an environment that supports both investor protection and economic development. Thank you for considering my concerns. I look forward to the Commission's response and potential adjustments to the proposed rule. Sincerely, Rex Holden Sent with Proton Mail secure email.