Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." While I acknowledge the importance of protecting investor assets, I have several concerns and reservations regarding certain aspects of the proposed rule. In particular, I would like to address the lack of clarity on recordkeeping requirements for digital assets and the potential negative impact of the rule on companies and protocols that may not be able to accommodate the proposed regulations within the given timeline. Firstly, the proposed rule does not provide clear guidance on recordkeeping requirements for digital assets. As the market for digital assets continues to evolve and expand, it is crucial for regulators to provide clear expectations for investment advisers regarding recordkeeping practices. Failure to do so could create significant difficulties and uncertainties for market participants, hindering their ability to comply and appropriately safeguard client assets. Therefore, I urge the SEC to clarify the recordkeeping requirements specifically for digital assets in order to provide certainty and facilitate compliance. Secondly, I am concerned about the timing of the proposed regulations. It appears that these regulations are being rushed into effect without allowing sufficient time for companies and protocols to adjust and accommodate the new requirements. Compliance with the proposed rule may require significant changes in systems, processes, and operations, which may take time and resources to implement. Forcing immediate compliance could put undue burden on investment advisers, potentially disrupting their operations and hindering their ability to effectively serve their clients. Therefore, I suggest the SEC consider extending the implementation timeline to allow for a smoother and more orderly transition. Furthermore, I would like to raise the potential impact of the proposed rule on entities operating abroad. The global nature of the investment advisory industry means that investment advisers, including those based in the United States, often serve clients and manage assets across multiple jurisdictions. It is crucial for the SEC to ensure that the proposed rule does not conflict with regulations in other jurisdictions, as this could create inconsistency and uncertainty for investment advisers and ultimately harm their ability to serve clients in a globally competitive market. Therefore, I urge the SEC to conduct a thorough analysis of the potential impact of the proposed rule on international operations and consider the need for harmonization with global regulatory frameworks. In conclusion, while I support the SEC's goal of enhancing investor protections through the "Safeguarding Advisory Client Assets" rule, I believe that certain aspects of the proposed rule require further clarification and consideration. Specifically, the lack of clarity on recordkeeping requirements for digital assets and the potentially rushed implementation timeline may pose challenges for market participants. Additionally, the impact on international operations should be carefully evaluated to ensure consistency with global regulatory expectations. I appreciate the opportunity to provide my input and hope that the SEC will give serious consideration to the concerns raised in this comment. Sincerely, Nathan