Oct. 23, 2023
Krzysztof Burek [REDACTED] 23.10.2023 Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule titled "Safeguarding Advisory Client Assets." While I understand the intention behind the rule is to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of the proposal may have unintended negative consequences. One area of concern is the potential negative impact on peer-to-peer exchanges. It is crucial to recognize the value and importance of user autonomy and financial sovereignty in today's digital age. The proposed rules may hinder the growth and development of peer-to-peer exchanges by imposing stringent requirements that could limit users' ability to transact and protect their assets freely. This could impede innovation and discourage individuals from participating in decentralized financial systems, which have the potential to promote financial inclusion and autonomy. Moreover, the proposed rules raise concerns about privacy and the safety of sensitive financial data. Requiring so many third parties to have access to personal information, such as social security numbers and financial data, raises alarming privacy concerns. It is essential to strike a balance between investor protections and preserving individuals' privacy rights. Strong safeguards must be in place to protect against data breaches and potential misuse of sensitive personal information. In addition, I believe it is important to consider the potential burdens and compliance costs that this rule may impose on investment advisers. While investor protection is of utmost importance, it is equally crucial to ensure that the compliance costs are reasonable and do not disproportionately burden smaller investment advisers. Striking the right balance in regulatory requirements is key to maintaining a thriving and competitive market. Furthermore, the proposed rule should account for the diverse nature of investment advisers and the various custodial practices in place. Applying a one-size-fits-all approach may not be suitable for the dynamic and evolving nature of the investment advisory industry. Flexibility should be provided to allow investment advisers to adhere to appropriate safeguarding practices while reflecting the specific needs and circumstances of their clients and business models. I appreciate that the Securities and Exchange Commission has conducted an economic analysis of the proposed rule. However, it is crucial to fully consider the potential economic effects, both qualitative and quantified, when implementing such regulations. It is important to assess the potential impact on market competition, investment efficiency, and overall capital formation. Any rules that inadvertently stifle competition, restrict access to financial services, or hinder market growth need to be reassessed to ensure a healthy and vibrant economy. In conclusion, I urge the Securities and Exchange Commission to carefully consider the concerns outlined above. While enhancing investor protections is paramount, it is essential to strike the right balance to avoid unintended negative consequences, such as hindering innovation, jeopardizing privacy, burdening investment advisers disproportionately, and limiting market competition. Thank you for the opportunity to provide my input on this important matter. Sincerely, Krzysztof