Oct. 31, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule titled "Safeguarding Advisory Client Assets", which aims to enhance investor protections and address gaps in the custody rule. While I appreciate the SEC's efforts to strengthen the safeguards for client assets, I have concerns regarding the lack of clarity on custody requirements for digital assets and the use of poorly defined terms in the proposal. Firstly, the proposal fails to provide clear guidelines on custody requirements for digital assets, creating uncertainty for market participants. As the cryptocurrency market continues to evolve, it is crucial for regulatory authorities to establish clear and comprehensive rules to ensure the protection of these assets. Unfortunately, the current proposal does not provide specific criteria for determining who qualifies as a qualified custodian for digital assets. This ambiguity leaves room for inconsistent interpretations and may hinder the growth and innovation of the digital asset industry. Furthermore, the proposal utilizes poorly defined terms that are susceptible to multiple interpretations. The terms "platform," "software," and "ledger" are essential components within the digital asset ecosystem, yet the proposal lacks explicit definitions for these terms. Without clear definitions, it becomes challenging for market participants to navigate the regulatory landscape effectively. Additionally, the definition of terms such as "wallet" and "validator" do not align with their technical meanings, leading to confusion and potential misapplication of the rules. It is essential for regulatory agencies to provide clear and concise guidelines to facilitate compliance and enhance investor protection. By offering explicit definitions and comprehensive frameworks for custody requirements, the SEC can promote a more transparent and secure environment for digital asset investments. In order to address these concerns, I urge the SEC to collaborate with relevant industry stakeholders, including digital asset custodians, blockchain developers, and experts, to develop comprehensive guidelines and definitions for custody requirements and digital asset terminologies. This collaborative approach will help to ensure that the regulatory framework keeps up with the rapid pace of technological advancements in the digital asset space. In conclusion, while I support the SEC's goal of enhancing investor protections through the proposed rule on safeguarding advisory client assets, I believe it is vital to address the lack of clarity on custody requirements for digital assets and the use of poorly defined terms. By taking appropriate actions to provide clear guidelines and definitions, the SEC can foster a regulatory environment that encourages innovation while still protecting investors. Thank you for considering these concerns and soliciting public comments. I look forward to the SEC's continued commitment to investor protection and the development of a robust regulatory framework.