Oct. 28, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." As a concerned U.S. citizen, I believe it is crucial for the Securities and Exchange Commission (SEC) to consider the implications of digital assets, particularly cryptocurrencies, and the need for blockchain interoperability in the safeguarding of client assets. While the proposed rule includes provisions discussing the application of the rule to crypto assets, a significant oversight lies in the insufficient consideration of blockchain interoperability. With the rapid growth and adoption of blockchain technology, it is paramount that regulatory frameworks address the unique challenges and opportunities posed by digital assets. Blockchain technology enables the secure transfer and ownership of digital assets, providing an innovative solution for managing and safeguarding client assets. However, the current proposal does not adequately explore the potential benefits of cross-chain asset management. In the absence of interoperability, valuable opportunities for efficient, seamless, and secure asset transfers across different blockchain networks are greatly hindered. By neglecting to address blockchain interoperability, the potential for asset diversification and risk mitigation through multi-chain investments is limited. Clients' ability to fully utilize the benefits of digital assets within their investment portfolios is compromised, ultimately hindering the growth and potential of the digital asset market. As the proposed rule aims to enhance investor protections and address gaps in the custody rule, it is essential to consider the transformative aspects of digital assets like cryptocurrencies. Regulatory uncertainties surrounding digital assets necessitate an agile and forward-thinking approach to ensure appropriate investor safeguards. My concern lies within the inherent complexities in safeguarding digital assets across multiple blockchain networks. Each blockchain network may employ different protocols, consensus mechanisms, and security measures. Without adequate consideration of blockchain interoperability, investment advisers may face challenges in effectively demonstrating exclusive control over digital assets and ensuring their proper safeguarding. To harness the benefits of digital assets and promote investor confidence, the SEC must proactively engage with the evolving blockchain landscape. This can be achieved by incorporating provisions that encourage and facilitate blockchain interoperability within the proposed rule. By doing so, the SEC can foster an environment where investment advisers can efficiently and securely manage client assets across multiple blockchain networks, without compromising investor protection. I strongly urge the SEC to prioritize the inclusion of provisions that promote blockchain interoperability within the final rule on "Safeguarding Advisory Client Assets". This will ensure that investment advisers can harness the full potential of digital assets in safeguarding client assets, while also enhancing investor protections. Thank you for considering my concerns. I believe that addressing the issues I have outlined will foster a more inclusive and forward-thinking regulatory framework that realizes the transformative benefits of digital assets for both investors and the financial industry as a whole. Sincerely, A Concerned U.S. Citizen