Oct. 28, 2023
Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Public Comment on Proposed Rule: Safeguarding Advisory Client Assets (Release No. IA-5354; File No. S7-26-21) To Whom It May Concern, I am writing to express my concerns regarding the proposed rule "Safeguarding Advisory Client Assets" issued by the Securities and Exchange Commission (SEC). While I appreciate the efforts made by the SEC to enhance investor protections and address gaps in the custody rule, I believe that the rule as currently proposed fails to adequately consider the unique properties of cryptocurrency. Digital assets, such as cryptocurrency, have emerged as a transformative force in the financial industry. The underlying blockchain technology offers benefits such as increased security, transparency, and efficiency. However, the decentralized nature and technological complexities of cryptocurrency present challenges in formulating practical and effective regulatory requirements. The proposed rule broadly applies the same regulatory framework to cryptocurrency assets as traditional assets, failing to recognize the fundamental differences between the two. Digital assets operate within a decentralized ecosystem, devoid of traditional custodial relationships. Imposing traditional custodial requirements on cryptocurrency assets may be impractical and hinder innovation in this rapidly evolving industry. Moreover, the SEC's proposed amendments to the custody rule fail to provide clear guidance on the application of the rule to digital assets. The lack of regulatory clarity surrounding custody and control over cryptocurrency assets creates uncertainty for investment advisers and may discourage their engagement with this emerging asset class. It is imperative that the SEC takes into account the unique properties of cryptocurrency when formulating regulatory requirements. A one-size-fits-all approach may stifle innovation and hinder the development of a robust digital asset market. Instead, the SEC should adopt a flexible regulatory framework that encourages responsible investment in digital assets while ensuring investor protection. I urge the SEC to engage in industry consultation and collaborate with relevant stakeholders to gain a comprehensive understanding of the technological intricacies and the resulting challenges associated with safeguarding digital assets. Such engagements could lead to specific and tailored regulatory guidelines that consider the decentralized nature of cryptocurrency and encourage innovation, while still protecting investors and preventing fraudulent or unethical practices. In conclusion, the current proposal fails to adequately consider the unique properties of cryptocurrency, thus imposing unrealistic requirements on digital asset custodians. I strongly urge the SEC to revisit its approach and engage in a constructive dialogue with the industry to develop a regulatory framework that fosters innovation and ensures the protection of investors in this rapidly evolving digital asset landscape. Thank you for considering my comments. I appreciate the opportunity to provide input on this important matter. Should you require any further information or clarification, please do not hesitate to contact me. Sincerely,