Oct. 31, 2023
Dear Securities and Exchange Commission, I am writing to share my concerns regarding the proposed rule "Safeguarding Advisory Client Assets" and the potential impact it may have on small businesses and startups, particularly those operating in the digital asset industry. While I acknowledge the need for enhanced investor protections and safeguards for client assets, I believe that the proposed rules place a disproportionate burden on small businesses and startups, hindering innovation and growth in this emerging and transformative sector. One of the key areas of concern is the treatment of digital assets, including cryptocurrencies, under the proposed rule. Digital assets have emerged as a new form of investment, utilizing blockchain technology to revolutionize finance. However, regulatory uncertainties surrounding these assets have posed significant challenges for businesses operating in this space. The proposed rule fails to provide clear guidelines or exemptions for digital assets held by investment advisers, resulting in additional compliance costs and regulatory complexities for small businesses and startups. This lack of clarity has a chilling effect on innovation and capital formation in the digital asset industry. Small businesses and startups, which are often the drivers of technological advancements and job creation, are already grappling with the evolving regulatory landscape. The additional compliance burdens imposed by the proposed rule could stifle growth and limit the ability of these companies to compete with larger, more established firms. It is crucial that the SEC addresses this issue by providing clear and practical guidelines for investment advisers holding digital assets. Furthermore, the proposed rule's burdensome compliance requirements may be particularly challenging for small businesses and startups that have limited resources and operational capacities. These entities often operate with lean teams and tighter budgets, making it difficult for them to bear the costs associated with extensive reporting, compliance, and recordkeeping requirements. Imposing such requirements on small businesses without considering the varied practices and resources available to them could stifle innovation and create an uneven playing field. To maintain a vibrant and competitive financial industry, it is important to strike a balance between investor protection and fostering innovation. The SEC should consider proportionate and pragmatic regulatory approaches that address the unique challenges faced by small businesses and startups, particularly in the digital asset industry. Offering clear and tailored guidelines for investment advisers operating with digital assets will allow these firms to thrive while still ensuring investor protection. In conclusion, I urge the SEC to carefully consider the burden that the proposed rule "Safeguarding Advisory Client Assets" may impose on small businesses and startups, specifically those operating in the digital asset industry. Through the provision of clear guidelines and proportionate regulations, the SEC can promote innovation and growth while maintaining necessary investor protections. It is crucial to foster an environment that supports and encourages the development of new technologies, without unduly stifling small businesses and startups. Thank you for considering my comment on this matter. Sincerely, Colin Goedegebuure