Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to comment on the proposed rule "Safeguarding Advisory Client Assets" (Docket No. SEC-2020-0036). While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, I have several concerns regarding the potential negative impact on the competitiveness of US companies and the burden imposed on small businesses. First, I would like to emphasize the potential competitive disadvantage that US companies may face compared to their international counterparts as a result of these proposed rules. The rules expand the coverage to include a broader range of investments, including crypto assets. While it is important to safeguard client assets, these extended requirements may hinder the ability of US companies to compete globally, leading to capital flight and loss of market share. We must strike a balance between protecting investors and promoting innovation in the digital asset space. Furthermore, I am deeply concerned about the impact of these reporting requirements on small businesses and start-ups. The proposed rule would require them to track personally identifiable information, which would be an additional expense for such businesses. These costs could put smaller projects at a significant disadvantage and potentially stifle innovation. It is crucial to consider the disproportionate burden that these regulations may impose on small entities, hindering their ability to compete and grow. In addition to my concerns about US competitiveness and the burden on small businesses, I also have reservations about the overall impact of these rules on the economy. While it is important to enhance investor protections and oversight, we must be cautious not to impose excessive regulatory requirements that hinder the flow of capital, investment, and innovation. Striking a balance between prudent regulation and fostering economic growth is paramount to ensure the long-term sustainability and success of the investment advisory industry. Furthermore, I believe that the current regulatory landscape, which imposes such extensive reporting and compliance obligations, may lead to unintended consequences. The proposed rules may inadvertently discourage innovation and technological advancements in the digital asset space, thereby limiting the potential benefits they can bring. With other jurisdictions already embracing digital assets as part of their financial systems, the US risks falling behind in this rapidly evolving sector if we burden companies with overly restrictive regulations. In conclusion, while I appreciate the SEC's efforts to enhance investor protections and safeguard client assets, I urge you to carefully consider the potential negative impact on the competitiveness of US companies and the burden imposed on small businesses. The regulatory landscape should strike a balance between protecting investors and fostering innovation, ensuring that the US remains a global leader in the financial industry. Thank you for considering my comments. Sincerely, Kevin Miller