Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule. However, I have concerns regarding the lack of clarity on the definition of digital assets, especially in relation to cryptocurrencies. The proposal does not provide clear guidance on what constitutes a digital asset. In recent years, digital assets, particularly cryptocurrencies, have emerged as a significant force in the financial industry, leveraging blockchain technology to transform the way we engage with financial transactions. However, there are still regulatory uncertainties surrounding these assets, and it is crucial for the SEC to provide a clear and comprehensive definition. Without a well-defined and robust framework for digital assets, market participants face challenges in understanding their regulatory obligations and ensuring compliance. This lack of clarity leaves the door open for potential misinterpretation and inconsistent enforcement, which can hinder the development of this nascent industry. Additionally, privacy concerns related to digital assets need to be addressed. As cryptocurrencies rely on decentralized networks and cryptography to enable secure and private transactions, it is crucial to strike a balance between privacy and regulatory oversight. While it is essential to safeguard client assets and protect against illicit activities, it is equally important to respect individuals' privacy rights and allow for innovation in the digital asset space. The SEC should consider working closely with industry participants, market experts, and other regulatory bodies to develop a clear and robust regulatory framework for digital assets. This framework should provide guidance on issues such as custody, transferability, and recordkeeping, while also addressing privacy concerns. Furthermore, the SEC should ensure that any regulatory measures applied to digital assets are proportional and risk-based. Overly burdensome regulations can stifle innovation and hinder the growth of this transformative technology. By adopting a risk-based approach, the SEC can strike a balance between protecting investors and allowing for the continued development of digital assets. In conclusion, I appreciate the SEC's ambition to enhance investor protections through the proposed rule. However, I urge the SEC to address the lack of clarity surrounding the definition of digital assets, particularly cryptocurrencies. By providing clear guidance and addressing privacy concerns, the SEC can foster a regulatory environment that fosters innovation while safeguarding investor interests. Thank you for considering my comments. I look forward to the SEC's careful consideration of these concerns and the development of an inclusive and effective regulatory framework for digital assets. Sincerely, Michael Smith Sent from Proton Mail for iOS