Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to submit a public comment on the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have concerns regarding the potential overreach of regulatory authority, particularly in the area of digital assets and cryptocurrencies. Firstly, I believe there is a significant risk of the SEC exceeding its regulatory authority by encroaching on areas that should be regulated by other agencies. The rise of digital assets, such as cryptocurrencies, has presented unique challenges and opportunities in the financial industry. Digital assets, built on blockchain technology, have the potential to transform finance and provide new avenues for investment and capital formation. However, regulatory uncertainty surrounding digital assets has hindered innovation and market growth. While it is important to safeguard client assets, it is equally essential to foster an environment that allows for innovation and competition to thrive. The SEC's proposed rule should consider the need for flexibility and adaptability to accommodate emerging technologies and evolving market practices. It is imperative that any regulations in this space provide clarity and guidance without stifling innovation. Specifically, I would like to address the proposed rule's application to digital assets or cryptocurrencies. The rule discusses the challenges in demonstrating exclusive control over these assets and the need to ensure their safeguarding. However, the proposed rule should prioritize providing clarity and guidance to market participants rather than imposing cumbersome requirements that could impede growth in this nascent industry. Furthermore, I urge the SEC to consider engaging with stakeholders in the digital asset space, including industry participants and experts, to gain a deeper understanding of the unique characteristics and challenges of these assets. By actively collaborating with industry stakeholders and other relevant agencies, the SEC can develop a regulatory framework that effectively safeguards client assets while ensuring the ongoing growth and innovation of the digital asset ecosystem. In conclusion, I appreciate the SEC's efforts to enhance investor protections through the proposed rule "Safeguarding Advisory Client Assets." However, I urge the SEC to exercise caution in potentially overreaching its regulatory authority and stifling innovation, particularly in the area of digital assets and cryptocurrencies. The SEC should seek input from stakeholders and engage in a collaborative process to develop a regulatory framework that addresses the unique characteristics and challenges of digital assets while fostering innovation and competition. Thank you for considering my concerns. I trust that you will carefully evaluate all public comments in shaping the final rule. Sincerely, Dhimitër Ekonomi