Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule titled "Safeguarding Advisory Client Assets". While I understand the need to enhance investor protections and address gaps in the custody rule, I believe that certain aspects of this proposed rule may have a negative impact on investor access to digital assets. One of my main concerns is the scope of the rule, particularly the inclusion of poorly defined terms. The proposed regulations use terms such as "platform," "software," and "ledger" without providing clear definitions. These terms are susceptible to various interpretations, which may lead to confusion and inconsistency in the application of the rule. Additionally, the definition of other terms, like "wallet" and "validator," do not align with their technical meaning. This lack of clarity may hinder investors' ability to understand their legal obligations and make informed decisions. Furthermore, the proposed rule's treatment of digital assets may restrict investor access to this emerging asset class. By imposing additional custody requirements and limitations without sufficient justification, the rule may create unnecessary barriers to entry for investors. This could stifle innovation and limit the potential growth and development of the digital asset market. As we consider the potential negative impact on investor access to digital assets, it is important to strike a balance between regulatory oversight and enabling investors to participate in this evolving industry. Clarity in terms and a nuanced approach to the regulation of digital assets will be essential to ensure that the rule does not inadvertently impede investor access or hinder the growth of this asset class. In conclusion, I urge the Securities and Exchange Commission to carefully consider the potential negative impact on investor access to digital assets and take necessary steps to address the concerns raised regarding the use of poorly defined terms and restrictive regulations. By adopting a balanced and informed approach, we can safeguard investor interests without stifling innovation and opportunity. Thank you for considering my comments. If there are any additional areas of concern or questions regarding the proposed rule, I would be more than willing to offer my input. Sincerely, David