Oct. 23, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets" and its treatment of different types of digital assets. While I understand the SEC's intention to enhance investor protections and address gaps in the custody rule, I believe that the proposed rules fail to provide consistent and clear guidelines for the treatment of digital assets. One major concern is the unequal treatment of different types of digital assets. The proposed rules attempt to address crypto assets, which have become an increasingly important part of the investment landscape. However, the rules fail to provide a clear framework for the treatment of different types of digital assets, leading to confusion and potential regulatory arbitrage. Digital assets, such as cryptocurrency, are built on blockchain technology and have the potential to transform the finance industry. However, regulatory uncertainties surrounding these assets have posed significant challenges for both investors and advisers. The proposed rules must provide clear guidance on the treatment of digital assets to ensure a level playing field and encourage innovation in this emerging space. Moreover, the proposed rules emphasize the need to demonstrate exclusive control over digital assets, which may present unique challenges. The SEC should consider the practical difficulties faced by investment advisers in demonstrating exclusive control over digital assets, particularly in cases where multiple parties may have legitimate access to such assets. It is also important to note that the proposed rules have the potential to stifle innovation in the digital asset space. By failing to provide clear and consistent guidelines, the rules may create a regulatory environment that discourages investment and hampers the growth of this transformative technology. It is vital for the SEC to strike a balance between protecting investors and fostering innovation in the digital asset market. Furthermore, the proposed rules should take into account the evolving nature of digital assets and blockchain technology. The rapid pace of innovation in this field necessitates a flexible regulatory framework that can adapt to new developments. Fixed regulatory requirements may impede the growth and development of digital assets and inhibit their ability to provide value to investors. In conclusion, the proposed rule "Safeguarding Advisory Client Assets" requires further consideration and refinement, particularly in its treatment of different types of digital assets. The SEC must provide clear guidelines on the treatment of digital assets and create a regulatory environment that encourages innovation while ensuring investor protection. By doing so, the SEC can foster a vibrant and secure investment landscape for both traditional and emerging asset classes. Thank you for considering my concerns. I urge the SEC to carefully review the proposed rules and take my comments into account. James Corner