Oct. 28, 2023
Dear Securities and Exchange Commission, I, A Concerned U.S. Citizen, am writing to submit my public comment on the proposed rule "Safeguarding Advisory Client Assets" by the Securities and Exchange Commission (SEC). I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule; however, I have concerns regarding the proposed rule's insufficient consideration of global regulatory standards for digital assets. Digital assets, such as cryptocurrencies, have transformed the financial landscape through the innovative use of blockchain technology. However, their regulatory treatment remains uncertain and subject to various interpretations around the world. As a concerned citizen, I believe it is crucial for the SEC to align its rules with international regulatory standards for digital assets to avoid fragmentation and hindrance of cross-border transactions. While the proposed rule expands the coverage to include a broader range of investments held in a client's account, it crucially lacks guidance on the treatment of digital assets. The SEC should take into consideration the evolving nature of the digital asset industry and engage in robust dialogue with international regulators to develop a harmonized approach that facilitates innovative financial practices while ensuring investor protection. Furthermore, the proposed rule poses challenges for investment advisers in demonstrating exclusive control in relation to digital assets. Given the unique characteristics and custody mechanisms of digital assets, it is essential for the SEC to provide clear and practical guidelines for demonstrating exclusive control to protect client assets effectively. Without such guidance, investment advisers may face unnecessary compliance burdens and financial risks, limiting their ability to provide comprehensive services to clients. To address these concerns, the SEC should collaborate with international regulatory bodies to establish a framework that provides clarity and consistency in the treatment of digital assets. By aligning with global regulatory standards, the SEC can foster innovation and competitiveness in the digital asset industry, attract responsible businesses, and ensure efficient cross-border transactions. Additionally, the proposed amendments to the investment adviser recordkeeping rule would require advisers to maintain records related to client notifications, custodian information, and transactions, among others. However, these amendments fail to address the unique challenges associated with recording and verifying transactions involving digital assets. The SEC should provide specific guidance on recordkeeping requirements pertaining to digital assets to ensure accurate and transparent reporting of these transactions. In conclusion, I urge the SEC to give due consideration to global regulatory standards for digital assets in its proposed rule "Safeguarding Advisory Client Assets." By aligning with international best practices, the SEC can promote regulatory harmonization, facilitate cross-border transactions, and foster innovation in the digital asset industry. I also encourage the SEC to provide detailed and specific guidance on the treatment of digital assets to enhance transparency, compliance, and investor protection. Thank you for considering my concerns. I trust that the SEC will take the necessary steps to address these issues and create a regulatory framework that promotes the responsible growth of the digital asset industry while safeguarding investor interests. Sincerely, A Concerned U.S. Citizen