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 SEC's efforts to enhance investor protections and address gaps in the custody rule, there are several issues that I believe need further examination. Firstly, the proposed rule lacks sufficient consideration of global regulatory standards, particularly when it comes to digital assets. As digital assets, such as cryptocurrencies, continue to gain prominence in the financial landscape, it is crucial that regulatory frameworks are in alignment with international standards. Failure to do so may create fragmentation and hinder cross-border transactions, ultimately impeding the growth and innovation potential of this emerging asset class. Furthermore, the rule's application to crypto assets needs to be carefully evaluated. As mentioned in the proposal, demonstrating exclusive control over these assets can be challenging. It is important to strike a balance between investor protection and fostering innovation in this space. A more nuanced approach is needed to ensure that the rules do not stifle the growth of digital assets while still providing adequate safeguards for investors. Additionally, the economic analysis provided in the proposal raises questions about the potential costs and benefits of the rule. While investor protections are essential, it is important to strike a balance between protecting investors and imposing burdensome compliance costs on investment advisers. A thorough assessment of the economic effects, including both qualitative and quantified assessments, is necessary to ensure that the benefits outweigh the costs. Moreover, I would like to suggest that the SEC consider exploring reasonable alternatives to the proposed rule. This could involve engaging with industry professionals and stakeholders to identify approaches that achieve the desired investor protections without unduly burdening investment advisers or impeding market efficiency. In conclusion, I urge the SEC to carefully consider the concerns raised regarding global regulatory standards, the application of the rule to digital assets, and the economic impact of the proposed rule. By addressing these concerns, the SEC can promote investor protection while fostering innovation and maintaining a competitive market. Thank you for the opportunity to provide this public comment. Sincerely, Gergely Filep