Oct. 21, 2023
Securities and Exchange Commission 100 F Street, NE Washington, D.C. 20549 Subject: Public Comment on "Safeguarding Advisory Client Assets" Proposal Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." As a concerned citizen and investor, I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule. However, I believe that certain aspects of the proposed rule require further consideration and refinement in order to be effective and ensure the fair treatment of investors. One area of concern that has caught my attention is the inadequate consideration of the unique properties of cryptocurrency. While the proposed rule attempts to address the safeguarding of client assets, it falls short in considering the decentralized nature and technological complexities of digital assets, such as cryptocurrencies. The SEC's regulatory requirements for safeguarding client assets should account for the distinct characteristics and challenges posed by digital assets. Cryptocurrencies have the potential to revolutionize finance by providing increased efficiency, transparency, and accessibility. However, they also introduce novel risks and considerations that need to be properly understood and regulated. In the absence of a clear framework that recognizes the unique nature of cryptocurrencies, the proposed rule might impose impractical requirements on investment advisers, leading to hindered innovation and discouragement of cryptocurrency investments. It is essential for the SEC to engage with stakeholders from the cryptocurrency industry and other relevant jurisdictions to develop a comprehensive regulatory approach that balances investor protection with fostering growth and innovation. By incorporating insights from industry experts and understanding the nuances of digital assets, the SEC can craft regulations that effectively safeguard client assets and encourage responsible participation in the cryptocurrency space. Moreover, the SEC should also consider the potential unintended consequences of strict regulatory requirements on cryptocurrencies. Excessive burdens on investment advisers could lead to a shift towards unregulated platforms, posing even greater risks to investor protection. Striking the right balance is crucial in order to provide a regulatory environment that instills confidence while allowing for the continued development and utilization of digital assets. I would encourage the SEC to undertake a thoughtful and thorough examination of the unique considerations associated with digital assets and engage in a collaborative dialogue with industry participants. By doing so, the SEC can ensure that the proposed rule effectively addresses the challenges of safeguarding cryptocurrency assets and promotes a fair and vibrant digital asset ecosystem. In conclusion, I appreciate the SEC's dedication to investor protection through the proposed rule "Safeguarding Advisory Client Assets." However, I urge the SEC to further consider and address the unique properties and challenges presented by cryptocurrencies when establishing safeguards for digital asset investments. By adopting a nuanced approach, the SEC can create a regulatory framework that bolsters investor trust while fostering innovation and responsible growth within this rapidly evolving space. Thank you for considering my comments. I hope that the SEC will take them into account during the rulemaking process. If you have any further questions about my public comment or require any additional information, please do not hesitate to contact me. Sincerely, M Lakdawala