Oct. 31, 2023
Vincent Dermatoian 1426 N Park Dr Mount Prospect, IL, 60056 10/31/2023 Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-8549 Re: Safeguarding Advisory Client Assets Proposed Rule Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets" (the "Proposed Rule"). While I appreciate the Securities and Exchange Commission's (SEC) efforts to enhance investor protection and address gaps in the custody rule, I have concerns regarding certain aspects of the regulation. I believe these concerns need to be addressed to ensure the effective safeguarding of client assets, privacy protection, and the preservation of a regulatory framework that considers the unique nature of cryptocurrency. Firstly, I would like to express my concerns regarding the Proposed Rule's inadequate consideration of the unique properties of cryptocurrency. As the SEC attempts to safeguard these innovative digital assets, it is essential to understand the decentralized nature and technological complexities associated with cryptocurrencies. Imposing impractical regulatory requirements without taking these factors into account may undermine the growth and development of this emerging industry. To effectively protect investor interests and encourage innovation, the SEC must engage with stakeholders to create a framework that balances security and technological advancements. Moreover, I am deeply concerned about the implications of the Proposed Rule on privacy and data security. The rule's requirement of disclosing sensitive financial data, including social security numbers, to multiple third parties raises serious concerns about privacy and consumer safety. While the improved safeguarding of client assets is undoubtedly crucial, it should not come at the expense of exposing individuals to potential breaches and identity theft. It is imperative that the SEC ensures the highest standards of data protection, encryption, and access control are implemented to mitigate the risks associated with the collection and storing of client information. Furthermore, I would like to emphasize that the Proposed Rule must delicately balance investor protection with the freedom of individual choice. The regulation should not unduly restrict or categorize decentralized digital assets as securities, as it may hinder the growth and innovation these assets offer. The unique nature of cryptocurrencies allows for network participation and decentralized decision-making, setting them apart from traditional securities. The SEC should carefully consider the distinction between securities and digital assets, enabling a regulatory environment that fosters innovation while maintaining necessary safeguards. In addition to the concerns mentioned above, I acknowledge the importance of the SEC's regulatory role in ensuring the adequate protection of client assets. Nevertheless, I encourage the SEC to thoroughly analyze the economic impacts of the Proposed Rule before its implementation. The Proposed Rule appears to strike a balance between investor protections and compliance costs. However, it is crucial that the SEC considers the potential unintended consequences on competition, advisory services, and qualified custodians. Furthermore, the regulatory burden imposed on investment advisers should be thoroughly evaluated to avoid disproportionately impacting smaller entities and stifling entrepreneurship and market development. In conclusion, I appreciate the SEC's commitment to improving investor protections through the Safeguarding Advisory Client Assets Proposed Rule. Nonetheless, it is essential to address the concerns raised in this comment to ensure the effective safeguarding of client assets, protection of privacy rights, and preservation of the innovative potential of cryptocurrency. By incorporating diverse perspectives and engaging with industry stakeholders, the SEC can create a regulatory framework that fosters growth, protects investor interests, and maintains the principles of freedom and privacy. Thank you for considering my public comment. I hope that the SEC will carefully evaluate these concerns before finalizing the rule. If I can provide any further information or clarification on the matters raised, please do not hesitate to contact me. Sincerely, Vincent Dermatoian