Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my comments on the proposed rule "Safeguarding Advisory Client Assets." While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have concerns regarding the unequal treatment of different market participants and the treatment of digital assets or cryptocurrencies. Firstly, the proposed rules seem to treat different market participants inconsistently, which may lead to unfair competition and potential market distortions. It is essential that regulations are applied consistently and without bias to ensure a level playing field for all market participants. As the regulator, the SEC should strive to create a transparent and fair environment that promotes competition and protects investors. I urge the SEC to carefully consider the implications of the proposed rules on market participants to avoid any unintended consequences. Secondly, the treatment of digital assets or cryptocurrencies needs careful consideration. It is undeniable that digital assets, especially cryptocurrencies, have transformed the financial landscape. However, the regulatory landscape surrounding these assets is still evolving, leading to uncertainties for market participants. The SEC should strive to strike a balance between promoting innovation and protecting investors. In the case of cryptocurrencies, it is crucial to address challenges in demonstrating exclusive control. Traditional custody practices may not be directly applicable to digital assets, requiring a nuanced approach. The SEC should consider engaging with industry participants and experts to develop pragmatic solutions that safeguard investors while allowing for continued innovation in the digital asset space. Additionally, the proposed rules should provide clear guidance on the application of the custody requirements to digital assets. The SEC should take into account the unique characteristics of digital assets and develop tailored regulations that address the specific risks without stifling innovation. By providing clarity and certainty, the SEC can foster investor confidence and promote responsible investment practices in the digital asset ecosystem. In conclusion, while I commend the SEC's efforts to enhance investor protections through the proposed rule, I urge the Commission to carefully consider the unequal treatment of different market participants and the evolving landscape of digital assets. Consistency and fairness are crucial elements of a well-regulated market, and regulations surrounding digital assets should strike a balance between innovation and investor protection. Thank you for considering my comments, and I hope that my concerns contribute to the development of well-informed regulations that benefit both investors and the broader market. Sincerely, Will R.