Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing in response to the proposed rule "Safeguarding Advisory Client Assets" and would like to bring attention to the potential negative impact on investor access to digital assets, particularly in the realm of cryptocurrencies. While I understand the goal is to enhance investor protections and address gaps in the custody rule, it is crucial to ensure that regulations do not unduly restrict investor access to this emerging asset class. Digital assets, such as cryptocurrencies, have emerged as a transformative force in the financial world, with the potential for exponential growth and innovative applications. The decentralized nature of blockchain technology has provided individuals with greater control over their financial assets and the opportunity to participate in a global, borderless financial system. However, regulatory uncertainties have limited the potential for widespread adoption and hindered market growth. One concerning aspect of the proposed rule is its impact on investor privacy. The requirement to demonstrate exclusive control over digital assets may pose serious privacy concerns, as it could potentially lead to the disclosure of sensitive information, compromising the security and anonymity that cryptocurrencies often provide. Privacy is a fundamental right that should be carefully considered when formulating regulations in the digital asset space. Furthermore, the proposed rule may unintentionally restrict investor access to digital assets due to the challenges in finding qualified custodians that are willing and able to comply with the stringent requirements. The lack of custodial options may effectively exclude certain investors from participating in this asset class, limiting their opportunities for diversification and potential financial gain. It is crucial to strike a balance between protecting investors and facilitating innovation, ensuring that regulations do not stifle market growth or inhibit investor access. Given the transformative potential of digital assets, it is important for regulators to take a nuanced approach that recognizes the unique characteristics of this asset class. Instead of a one-size-fits-all approach, regulations should be flexible and adaptable to emerging technologies, allowing for innovation while ensuring investor protection. This could include establishing industry best practices, encouraging self-regulation, and fostering collaboration between regulators and industry participants. While I appreciate the SEC's efforts to enhance investor protections through the proposed rule, it is essential to consider the potential negative impact on investor access to digital assets. Striking the right balance between regulation and innovation will be crucial in fostering a vibrant and inclusive digital asset ecosystem. I urge the SEC to carefully consider the concerns raised and work towards regulations that promote investor protection while still allowing for the growth and accessibility of digital assets. Thank you for considering my comments. Sincerely, Ganna Bennett