Oct. 22, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding 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 believe there are crucial considerations that have been overlooked, particularly in relation to the unique properties and challenges presented by cryptocurrency. First and foremost, it is imperative for the SEC to thoroughly understand the decentralized nature and technological intricacies of cryptocurrency before imposing regulatory requirements. The proposed rule lacks clear and comprehensive definitions for key terms related to digital assets, leading to confusion and uncertainty among investment advisers. Without proper definitions, it becomes difficult for advisers to determine the scope of the rule and comply appropriately. Moreover, the proposed rule fails to provide specific guidance on how investment advisers should navigate the custody of digital assets. As cryptocurrency operates on a decentralized network, exclusive control can be shared across multiple wallets or platforms. The SEC must address these unique challenges and provide clarity and flexibility to investment advisers in complying with custody requirements. Additionally, the proposed rule does not adequately address the operational and technical complexities associated with securing digital assets held by qualified custodians. Given the rapidly evolving landscape of cybersecurity risks, it is crucial for the SEC to consider the advancements and constantly evolving industry standards to ensure effective and robust safeguarding of client assets. To develop a regulatory framework that accurately reflects the realities of digital assets, the SEC must engage in a collaborative dialogue with industry experts, technologists, and stakeholders. It is crucial to evaluate existing industry standards and best practices, as well as explore innovative solutions that strike the right balance between investor protection and market growth. In conclusion, the proposed rule "Safeguarding Advisory Client Assets" requires a more nuanced understanding of the decentralized nature and technological intricacies of cryptocurrency. I urge the SEC to provide clear definitions for key terms and consider the operational and technical complexities involved in safeguarding digital assets. By fostering collaboration and open dialogue, the SEC can develop a regulatory framework that effectively protects investors without stifling innovation in the evolving digital asset space. Thank you for considering my concerns. I appreciate the opportunity to contribute to the public discussion on this important matter. Sincerely