Oct. 22, 2023
Dear Securities and Exchange Commission, My name is , and I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." While I recognize the importance of investor protection and the need for regulatory oversight, I have several concerns regarding the potential impact of this rule on small businesses, startups, and the privacy of individual investors. Firstly, I am deeply concerned about the burden this rule may place on small businesses and startups, particularly those operating in the digital asset industry. The proposed rules seem to disproportionately affect these entities, potentially stifling innovation and hindering their ability to compete on a level playing field. By imposing stringent custody requirements and strict recordkeeping obligations, this rule may create unnecessary barriers to entry and limit the growth of small businesses in the financial sector. Furthermore, the proposed rule raises concerns about the privacy and safety of sensitive financial data and personal information. As an investor, I value my privacy and trust that my financial information will be handled securely. However, the rule requires the submission of detailed client information, including social security numbers, to multiple third-party custodians. This greatly increases the risk of data breaches and identity theft. Therefore, it is crucial to carefully consider the potential privacy risks associated with this aspect of the proposed rule and implement robust safeguards to protect investors' sensitive information. Additionally, I believe the rule should consider viable alternatives to address these concerns. For example, requiring independent audits or certifications of the custodial controls can provide the necessary investor protection without imposing excessive burdens on small businesses and startups. Such alternatives would enable regulators to strike a balance between investor protection and fostering innovation and growth in the financial industry. In relation to these concerns, I also urge the SEC to thoroughly evaluate the economic impact of the proposed rule. Small businesses and startups contribute to economic growth, job creation, and technological advancements. It is essential to carefully analyze the potential consequences of these rules on these crucial segments of our economy before finalizing any regulations. Furthermore, I would like to emphasize the significance of considering the privacy concerns surrounding the proposed rule. The SEC must ensure that the implementation of these regulations does not compromise investors' privacy or expose them to unnecessary risks. Strengthening protections and encryption protocols, as well as limiting unnecessary data collection, would be steps in the right direction. To conclude, I appreciate the SEC's efforts to enhance investor protections through the proposed rule on safeguarding client assets. However, I strongly urge the SEC to carefully weigh the impact on small businesses, startups, and investors' privacy. With the rapid advancements in digital assets and technology, it is vital to strike a delicate balance between regulatory oversight and encouraging innovation and growth. I trust that the SEC will consider these concerns in the rulemaking process and adopt a balanced approach that promotes both investor protection and a thriving, competitive financial industry. Thank you for considering my comments. Sincerely, Kate Gio