Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets." While I appreciate the intention of enhancing investor protections and addressing gaps in the custody rule, there are several areas of the proposed rule that lack clarity and could potentially lead to confusion and misinterpretation. One area of concern is the lack of clarity in the definition of digital assets. The proposal fails to provide clear guidance on what constitutes a digital asset, leaving room for multiple interpretations. This ambiguity could pose significant challenges for investment advisers who are entrusted with safeguarding client assets. Furthermore, the proposed rule utilizes poorly defined terms, such as "platform," "software," and "ledger," that are susceptible to different interpretations. Additionally, the definitions of other terms, like "wallet" and "validator," do not accurately reflect their technical meaning. This lack of precision in terminology increases the likelihood of confusion and limited understanding among investment advisers. The consequences of such ambiguity and confusion could be detrimental to investors and undermine the stated goals of the proposal. Investment advisers require clear and unambiguous guidance to effectively safeguard digital assets and maintain the trust of their clients. Without precise definitions, investment advisers may struggle to develop appropriate safeguards and protocols, potentially putting client assets at risk. I strongly urge the Securities and Exchange Commission to provide more clarity and specificity in the definitions used throughout the proposed rule. Clear and uniformly understood terms are essential to promote compliance and ensure consistent implementation across the industry. This would ultimately enhance investor protections and reduce the potential for misinterpretation. In conclusion, the proposed rule on "Safeguarding Advisory Client Assets" falls short in offering clear and precise definitions, particularly in relation to digital assets. It is crucial that the Securities and Exchange Commission addresses the concerns raised regarding poorly defined terms. By doing so, the Commission can ensure that investment advisers have the necessary guidance to effectively safeguard client assets and maintain the trust of investors. Thank you for considering this public comment. Sincerely, Brian Topor