Oct. 28, 2023
I am writing to express my concerns regarding the proposed rule on safeguarding advisory client assets (the "Proposed Rule"). While acknowledging the importance of enhancing investor protection and addressing gaps in the custody rule, I believe there are several significant issues that need to be addressed in order to ensure effective and comprehensive regulation. Firstly, I would like to draw attention to the insufficient consideration of global regulatory standards in the Proposed Rule. In an increasingly interconnected financial world, it is crucial that regulatory frameworks align with international standards to prevent market fragmentation and hinderance of cross-border transactions. The proposal should take into account global best practices and strive for harmonization, particularly in the context of digital assets. By neglecting this aspect, the Proposed Rule may inadvertently create barriers to international cooperation and hinder the growth of digital asset markets. Furthermore, the impact of the Proposed Rule on users and protocols operating outside the United States is not adequately limited. The regulatory burden and reporting requirements should consider the nature of these protocols and ensure that they are proportionate and reasonable. Imposing excessive and onerous reporting requirements could impede innovation, stifle development, and discourage global participation in the advisory industry. It is essential to strike a balance that promotes investor protection while allowing for the potential economic benefits associated with cross-border engagement. In addition to these concerns, I also raise the issue of privacy risk and the potential infringement on the freedom of speech. The Increased reporting and recordkeeping requirements introduced by the Proposed Rule may have unintended consequences on personal privacy, as well as discourage open dialogue and idea-sharing. Safeguarding client assets is important, but it should be achieved without imposing unnecessary disclosures that may raise risks to individual autonomy, system security, and personal privacy. To ensure effective implementation and avoid unintended negative consequences, the Proposed Rule should foster cooperation and consultation among relevant stakeholders, including exploring solutions consistent with global regulatory standards. Collaboration among regulators, market participants, and concerned stakeholders in formulating comprehensive regulatory frameworks will provide a more robust foundation for the safeguarding of client assets and the promotion of an inclusive advisory ecosystem. I appreciate the Securities and Exchange Commission's commitment to investor protection and regulatory improvements. As an interested and concerned party, I urge the Commission to carefully consider the issues highlighted above and address them comprehensively in the final rule. As a regulator, it is crucial to strike the right balance between investor protection, global cooperation, individual privacy, and the promotion of an innovative advisory industry. Thank you for considering my comments. I trust that the Commission will thoroughly review the feedback received from all stakeholders and make informed decisions for the benefit of investors and the industry as a whole.