Oct. 28, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns and provide comments on the proposed rule "Safeguarding Advisory Client Assets" (File No. [Insert File No.]). While I acknowledge the SEC's aim to enhance investor protections and address gaps in the custody rule, I believe there are certain areas in the proposed rule where further consideration and refinement are necessary. Specifically, insufficient consideration has been given to the use of multi-signature wallets as a secure custodial solution for digital assets. Digital assets, such as cryptocurrencies, have transformed the financial landscape, offering new opportunities for investment and capital formation. As the use of digital assets continues to grow, it is essential that regulations provide clarity and support their safe and secure custody. Unfortunately, the current proposal fails to adequately consider the use of multi-signature wallets as a viable custodial solution. Multi-signature wallets, also known as multi-sig wallets, add an additional layer of security by requiring multiple key holders to authorize transactions. This technology not only reduces the risk of unauthorized access or theft but also protects against operational risks within a single organization. It is increasingly used by leading custodians and has demonstrated its effectiveness in safeguarding digital assets. However, the proposed rule lacks explicit recognition of multi-signature wallets as an acceptable form of custody for digital assets. This oversight could hinder the adoption of this technology by industry participants and limit the development of reliable custodial solutions. By failing to acknowledge and highlight the potential benefits of multi-signature wallets, the proposed rule fails to keep pace with technological advancements in the industry. I propose that the SEC amend the proposed rule to explicitly recognize and provide guidance on the use of multi-signature wallets as a secure custodial solution for digital assets. By doing so, the SEC can promote innovation in safeguarding client assets while ensuring investor protections and industry-wide compliance. Furthermore, I appreciate the SEC's acknowledgment of the challenges in demonstrating exclusive control over crypto assets. However, it is imperative that the SEC provides clear guidance on how investment advisers should demonstrate control over digital assets held in multi-signature wallets. This will allow for greater clarity and reduce ambiguity in compliance with the proposed rule. In conclusion, I urge the SEC to reconsider and amend the proposed rule to incorporate explicit recognition of multi-signature wallets as an acceptable form of custody for digital assets. By providing guidance and support for the adoption of this technology, the SEC can foster innovation, enhance investor protections, and address regulatory uncertainties surrounding digital assets. Thank you for considering my comments. I trust that the SEC will carefully evaluate all public feedback and take necessary steps to ensure the proposed rule adequately reflects the evolving nature of the financial industry. Sincerely, A Concerned U.S. Citizen