Oct. 24, 2023
Thank you for seeking public comments on the proposed "Safeguarding Advisory Client Assets" rule by the Securities and Exchange Commission (SEC). I have carefully reviewed the proposed rule and have several concerns which I hope the SEC will consider. Firstly, I would like to address the impact of the proposed rule on open finance platforms. Open finance, with its decentralized financial systems and innovative use of digital assets, has the potential to transform the financial industry and offer benefits to investors. However, the current regulatory uncertainties surrounding digital assets may hinder the development and adoption of open finance platforms. It is crucial for the SEC to create a regulatory framework that supports innovation, while also ensuring investor protections. In particular, the SEC's treatment of digital assets, including cryptocurrencies, warrants attention. Digital assets, built on blockchain technology, offer unique opportunities for investors. However, the proposed rule does not provide sufficient clarity on how investment advisers should safeguard and account for these assets. It is essential for the SEC to address these challenges as they arise and develop guidelines that strike a balance between innovation and investor protection. Furthermore, I would like to highlight the potential burdensome compliance costs that investment advisers, especially smaller entities, may face as a result of the proposed rule. The SEC's economic analysis acknowledges these costs and their potential impact on the industry. I urge the SEC to carefully consider the proportionality of the compliance requirements, particularly for smaller advisers, to avoid hindering competition and stifling capital formation. In conclusion, I appreciate the SEC's efforts to enhance investor protections through the proposed "Safeguarding Advisory Client Assets" rule. However, I believe that the rule should take into consideration the potential negative impact on open finance platforms and address regulatory uncertainties surrounding digital assets. Additionally, a careful assessment of the compliance costs should be conducted, particularly for smaller advisers, to ensure a balanced approach that encourages competition and capital formation. Thank you for your attention to these concerns. I urge the SEC to address these issues and incorporate the feedback provided by stakeholders in order to enhance the effectiveness and fairness of the final rule. If there are any further areas of concern or questions regarding the proposal, please let me know and I will be glad to provide additional feedback. Sincerely, Paul Young