Oct. 29, 2023
Dear Securities and Exchange Commission, I am writing to submit a public comment regarding the proposed rule on "Safeguarding Advisory Client Assets." While I acknowledge the need to enhance investor protections and address gaps in the custody rule, I have concerns about the potential overreach of regulatory authority and the lack of clarity surrounding certain aspects of the rule. One area of concern is the inclusion of digital assets or cryptocurrencies within the scope of the proposed rule. It is essential to recognize the transformative nature of these assets, built on blockchain technology, and the regulatory uncertainties they pose. The vagueness and ambiguity surrounding the proposed rule's application to digital assets raise concerns about potential consequences and challenges for the industry. Moreover, the complexity of the proposed rule and its technical requirements may pose significant compliance costs for investment advisers. The regulatory creep exhibited in the rule's complexity, inconsistent terminology, and conflicting rules from various agencies can lead to regulatory gaps and undue influence on market participants. Additionally, the lack of clarity in certain provisions leaves room for misinterpretation and potential legal disputes. Ambiguous terms and overly complex regulations may result in poor organization and unnecessary burdens for investment advisers, ultimately hindering the efficient operation of the advisory industry. Furthermore, the punitive approach evident in some elements of the proposed rule raises questions about fairness and regulatory capture. Unfair penalties and an unfair advantage for larger market participants can undermine healthy competition and deter new entrants from the industry. Another concerning aspect is the potential violation of privacy rights and the cost burden associated with compliance. The regulatory overlap and duplicative requirements from various regulatory bodies may further exacerbate compliance costs, creating an unnecessary barrier for smaller investment advisers. Regulations should strike a delicate balance between investor protection and avoiding overly intrusive measures that impede economic growth. The proposed rule, as currently presented, raises concerns about undue regulatory interference and the likelihood of stifling innovation in the advisory industry. As the SEC carefully considers the impact of this proposed rule on the economy, it is crucial to address the complex issues surrounding digital assets and ensure clarity in the regulations governing their custody. By fostering an environment that promotes fair competition, transparency, and streamlined regulatory requirements, the SEC can effectively achieve its objectives without unduly burdening industry participants. In conclusion, I urge the SEC to take into account the concerns raised about potential regulatory overreach, lack of clarity, and the challenges posed by digital assets. It is essential to strike a balance between investor protection, promoting innovation, and avoiding unnecessary compliance burdens. I strongly encourage the SEC to carefully review and revise the proposed rule to address these concerns and ensure a vibrant and competitive advisory industry. Thank you for considering my comments. Sincerely,