Oct. 24, 2023
Dear Securities and Exchange Commission, I am writing to provide my comments on the proposed rule, "Safeguarding Advisory Client Assets," and would like to express my concerns regarding the lack of industry expertise exhibited in the drafting of the proposal. As a concerned citizen and investor, I believe it is crucial for the Securities and Exchange Commission (SEC) to have a comprehensive understanding of the unique characteristics of digital assets and cryptocurrencies in order to effectively regulate the industry and safeguard investor assets. First and foremost, I have serious reservations about the SEC's ability to accurately assess the risks and challenges associated with digital assets and cryptocurrency custody. The rapid growth and innovation in this space necessitates specialized knowledge and expertise that the SEC appears to lack. By not engaging industry experts in the rule-drafting process, the SEC runs the risk of creating ineffective regulations that may hinder market growth and fail to adequately protect investors. Digital assets and cryptocurrencies operate on decentralized networks and are subject to technological vulnerabilities that traditional assets do not face. The SEC's proposed rule, although well-intentioned, does not sufficiently acknowledge the technical complexities and potential risks involved in custody arrangements for these assets. Without a deep understanding of the intricacies of blockchain technology and digital asset custody solutions, the SEC's rule may fall short in adequately addressing these critical elements. Moreover, the SEC's proposed rule does not provide clear guidance on the unique custody challenges posed by digital assets. For example, the proposal discusses the difficulties in demonstrating exclusive control over digital assets, but it fails to present a systematic approach to address this issue. Without a comprehensive framework in place, investment advisers may struggle to comply with the requirements, leading to confusion and potential non-compliance. To strengthen the proposed rule, I strongly urge the SEC to consult with industry experts who possess a deep understanding of digital assets and cryptocurrency custody solutions. By leveraging their expertise, the SEC can ensure that the rule adequately addresses the unique characteristics and associated risks of this emerging asset class. Collaboration between regulators and industry experts will foster a more effective regulatory framework and provide greater investor protections. In conclusion, I believe it is essential for the SEC to enhance its industry expertise in digital assets and cryptocurrency when drafting regulatory proposals. By doing so, the SEC can better understand the intricacies and complexities of this rapidly evolving landscape, and develop rules that effectively safeguard investor assets. I encourage the SEC to take into account these concerns during the rulemaking process and to incorporate industry expertise for a more informed and comprehensive regulatory approach. Thank you for considering my comments on this important matter. Sincerely, Gerlinde Poeckl