Oct. 15, 2023
According to the Mission page on the SEC website, one of the key aspects of the SEC’s mission is “Facilitating Capital Formation.” I argue the new rule “Safeguarding Advisory Client Assets” goes against the SEC’s mission. The costs of complying with the new security requirements will discourage some investment advisers from dealing with cryptocurrencies at all. Furthermore, these increased costs put a burden on smaller firms and may put them out of business, even though the SEC’s mission page suggests your goal is to help small businesses: “Access to capital is particularly critical for small businesses, which create approximately two-thirds of all new jobs in the U.S. economy.” Investment advisers may be forced to cease managing crypto assets on behalf of clients. The proposed rule will increase costs to investment advisers and clients. This would go against a key facet of the SEC’s mission: “Facilitating Capital Formation.” While the intent to protect investors is good, the rule will unintentionally restrain cryptocurrency advancement and acceptance, and contradicts the SEC’s mission.