Oct. 31, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." While I commend the SEC for its efforts to enhance investor protections and address custody rule gaps, there are certain areas of concern that I believe need to be addressed and clarified. One of my primary concerns revolves around the lack of clarity in the definition of digital assets within the proposed rule. The proposal fails to provide clear guidance on what constitutes a digital asset, which can lead to confusion and potential misinterpretation among investment advisers. As the use of digital assets, specifically cryptocurrencies, continues to grow and transform the financial landscape, it is crucial to establish a clear and comprehensive framework for their treatment within the rule. Without a precise definition and clear guidelines, investment advisers may find it challenging to properly safeguard these assets and comply with the proposed rule. Digital assets, such as cryptocurrencies, have the potential to revolutionize the way we transact and invest. However, their unique characteristics, built on blockchain technology and differing from traditional financial assets, necessitate a thoughtful approach to regulation. While it is understandable that regulatory uncertainties exist in this rapidly evolving space, the proposed rule should provide more clarity on how investment advisers should handle digital assets to ensure investor protection. Additionally, it is important to strike the right balance between investor protection and the promotion of capital formation and innovation. While safeguards are necessary to reduce asset loss risk, overly burdensome regulations could stifle the growth and development of the digital asset ecosystem. It is crucial for the SEC to consider the potential impact of the proposed rule on the efficiency, competition, and capital formation within the digital asset industry. Furthermore, I urge the SEC to carefully evaluate the economic and compliance costs associated with the proposed rule. The cost burden for investment advisers, especially smaller entities, should be adequately assessed and justified in relation to the anticipated benefits of the rule. It is vital to avoid imposing disproportionate compliance costs that may have unintended consequences, such as hindering the participation of smaller market participants and limiting competition. In conclusion, I appreciate the SEC's efforts to strengthen investor protections in the advisory industry through the proposed rule "Safeguarding Advisory Client Assets." However, I believe it is essential to address the lack of clarity on the definition of digital assets, specifically cryptocurrencies. Additionally, the SEC should carefully consider the impact of the proposed rule on capital formation, efficiency, and competition within the digital asset industry. Furthermore, the economic and compliance costs associated with the rule should be thoroughly evaluated to ensure they are proportionate and justifiable. Thank you for the opportunity to provide my input on this important matter. Sincerely, Elizabeth Miller