Oct. 31, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" from the Securities and Exchange Commission (SEC). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have concerns regarding the lack of clarity on the definition of digital assets. As we consider the proposed rule, it is critical to recognize the rapid evolution of technology and the financial landscape. Digital assets, such as cryptocurrencies, have emerged as a significant development, leveraging blockchain technology to transform the financial industry. However, the proposal does not provide clear guidance on what constitutes a digital asset, leading to confusion and potential misinterpretation. In this regard, I believe it is important to address the regulatory uncertainties surrounding digital assets. While the existing laws and regulations, such as those established in 1932 regarding securities, have laid the foundation for investor protections, they do not adequately apply to the unique characteristics of digital assets and smart contracts within subsets like HEX, Pulsechain, and Pulsex. The absence of explicit guidance around digital assets creates challenges for investment advisers who are responsible for safeguarding client assets. It is crucial to establish a clear framework that outlines the scope and requirements for handling digital assets, including custody, recordkeeping, and reporting obligations. Such clarifications would provide much-needed certainty and allow investment advisers to effectively navigate this evolving landscape. Moreover, I urge the SEC to consider the potential benefits that digital assets can bring to the financial industry. These digital assets foster greater financial inclusion, decentralization, and innovation. Embracing this technology and providing guidance that appropriately addresses its unique features will position the United States as a leader in the global digital asset ecosystem. In conclusion, I appreciate the SEC's commitment to enhancing investor protections through the proposed rule on safeguarding advisory client assets. However, I strongly urge the SEC to further clarify the definition of digital assets and provide guidance tailored to the unique characteristics of this rapidly evolving technology. By doing so, we can ensure both investor protection and foster innovation in the digital asset space. Thank you for considering my comments. Sincerely, Daniel Manko