Oct. 23, 2023
Maksymilian Kowalski Warszawa Poland U. S. Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549 Public Comment: To Whom It May Concern, I am writing to express my concerns regarding the proposal for "Safeguarding Advisory Client Assets" by the Securities and Exchange Commission (SEC). While the intent of this rule is to enhance investor protections, I believe there are certain areas that need further clarification and attention, specifically regarding the lack of clarity on the definition of digital assets. In today's rapidly evolving financial landscape, digital assets, such as cryptocurrencies, are becoming increasingly prevalent. These assets, built on blockchain technology, have the potential to transform the way we conduct financial transactions and investments. However, the lack of clear guidance on what constitutes a digital asset within the SEC proposal leads to confusion and potential misinterpretation. Without a precise definition of digital assets, investment advisers may struggle to determine how to best safeguard these innovative forms of value. This lack of clarity not only puts advisers at a disadvantage but also hampers the responsible and transparent handling of these assets. The SEC has a crucial role in providing regulatory certainty, establishing a level playing field, and fostering innovation within the digital asset space. As such, it is imperative that the definition of digital assets be clearly defined within this proposed rule. Furthermore, the proposal acknowledges the challenges in demonstrating exclusive control over crypto assets, given their unique characteristics. It is commendable that the SEC aims to enhance the protection of client assets within this realm. However, it is essential that the specifics of how investment advisers can effectively safeguard these assets are elaborated upon. Clear and comprehensive guidelines are necessary to ensure that investment advisers have adequate safeguards in place while avoiding unnecessary burden or stifling innovation. In addition to addressing the concerns surrounding digital assets, it is crucial for the SEC to strike a balance between safeguarding client assets and minimizing regulatory burdens. The proposed rule suggests extensive recordkeeping requirements and compliance obligations. While it is important to have appropriate safeguards in place, it is equally important to consider the potential impact and costs associated with compliance. Smaller investment advisers may find it particularly challenging to meet these requirements, potentially stifling competition and limiting access to financial advice for smaller investors. Furthermore, it is essential that the SEC considers the potential unintended consequences of these rule amendments and the impact they may have on capital formation and market efficiency. While the proposed rule aims to enhance investor protections and regulatory oversight, it is imperative to carefully assess any potential negative effects that may arise. A robust economic analysis, taking into account various stakeholder perspectives, is paramount to strike the right balance and ensure the rule achieves its intended objectives without hindering economic growth. In conclusion, while I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I urge the commission to provide greater clarity on the definition of digital assets. Additionally, a comprehensive economic analysis should be conducted to carefully consider the potential costs, benefits, and unintended consequences of the proposed rule and amendments. Thank you for considering my comments. I trust that the SEC will approach this rulemaking with diligence and careful consideration of the concerns raised by various stakeholders. Sincerely, Maksymilian