Oct. 27, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have concerns regarding certain aspects of the proposed rule and its potential impact on the competitiveness of US companies and the regulatory environment surrounding digital assets. Firstly, I am concerned that the proposed rule may put US companies at a competitive disadvantage compared to their international counterparts. The enhanced requirements and compliance costs could potentially drive the relocation of investment advisory entities to jurisdictions with more lenient regulations. This could result in capital flight and a loss of market share for US companies, impeding their ability to compete globally. Additionally, I would like to emphasize the need for the SEC to provide clearer guidance and regulatory certainty concerning digital assets, such as cryptocurrencies, which are built on blockchain technology. The rapid growth and transformative nature of digital assets have introduced unique challenges in terms of custody and safeguarding client assets. The proposed rule should recognize and address these challenges to ensure that the regulatory environment fosters innovation, rather than stifling it. I believe it would be beneficial to collaborate with industry experts and participants to develop comprehensive frameworks and best practices for the custody of digital assets. This collaborative approach will facilitate a deeper understanding of the technology and its implications, leading to more effective and tailored regulations that strike an appropriate balance between investor protection, market integrity, and innovation. Moreover, I encourage the SEC to provide more clarity on the definition and treatment of digital assets within the proposed rule. Given the dynamic nature of the digital asset space, it is crucial that regulations are adaptable and not overly burdensome. The SEC should consider implementing a flexible framework that allows for adjustments as the technology and market evolve, while also ensuring adequate investor protections. In conclusion, while I support the SEC's intent to enhance investor protections and address gaps in the custody rule, I urge the Commission to carefully consider the potential negative impact on the competitiveness of US companies and the need for clear guidance on digital assets. By striking the right balance, the SEC can foster innovation, protect investors, and maintain a competitive regulatory environment. Thank you for considering my concerns and feedback. I appreciate the opportunity to contribute to this important regulatory process. Sincerely, Sunny Ali