Oct. 31, 2023
Dear SEC, I am writing to express my concerns regarding the proposed rule on Safeguarding Advisory Client Assets. While I appreciate the SEC's aim to enhance investor protections and address gaps in the custody rule, I find that the current proposal lacks clarity and practicality, particularly in relation to the definition and treatment of digital assets. The proposed rule fails to provide clear guidance on what constitutes a digital asset, leaving industry participants in a state of confusion and potential misinterpretation. As we witness the rapid growth and transformation of the digital asset space, it is crucial that regulatory frameworks are well-defined and adaptable to new technologies. Without clear definitions and guidelines, investment advisers may face significant challenges in complying with the proposed rule, leading to compliance gaps and potential risks to client assets. Furthermore, the overly complex compliance measures outlined in the proposal may hinder effective implementation and enforcement. The language used in the proposed rule is ambiguous, making it difficult for investment advisers to understand and apply the requirements accurately. This lack of clarity may result in inadvertent non-compliance and unnecessarily burden investment advisers with complex and costly compliance processes. In considering practical alternatives to address the safeguarding of digital assets, I would recommend a more cooperative approach between regulators and industry participants. This approach could involve a comprehensive dialogue that takes into account the unique complexities and characteristics of digital assets. By fostering open communication and collaboration, the SEC can gain valuable insights from industry experts to develop practical and effective regulations that promote investor protection without stifling innovation. Additionally, the proposed rule should consider the global nature of digital assets and the potential for conflicting regulatory frameworks. As cryptocurrencies and other digital assets are borderless by nature, it is important that regulations are harmonized internationally to avoid fragmentation that may impede market development and hinder cross-border investment opportunities. In conclusion, I believe that the current proposal on Safeguarding Advisory Client Assets, particularly in relation to digital assets, lacks clarity and practicality. To ensure effective investor protection and to address the unique challenges posed by digital assets, I urge the SEC to engage in productive dialogue with industry participants, consider practical alternatives, and harmonize regulations on a global scale. Only through cooperative efforts can we strike the right balance between safeguarding investor assets and fostering innovation. Thank you for considering my concerns. Sincerely, Liam Fuller