Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment 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 several concerns regarding the scope and impact of the proposed rule. Specifically, I would like to focus on the burden on small businesses and startups in the digital asset industry. The proposed rules place a disproportionate burden on small businesses and startups, hindering innovation and growth in the digital asset industry. As the world becomes increasingly reliant on digital assets and blockchain technology, it is crucial that regulatory frameworks support the safe and efficient adoption of these technologies. The current proposal, however, fails to strike a balance between investor protection and the needs of small businesses in the digital asset space. The regulations surrounding digital assets, especially cryptocurrencies, are still evolving, and imposing stringent requirements on smaller firms can stifle innovation and discourage entrepreneurship. These businesses have the potential to drive economic growth and technological advancement, but the proposed rules put unnecessary strain on their operations. It is essential to recognize the unique challenges and opportunities presented by digital assets and ensure that regulations are flexible enough to accommodate their rapid development. The SEC's proposed rule encompasses digital assets within its scope and addresses challenges related to demonstrating exclusive control and safeguarding these assets. However, the proposed requirements may be overly burdensome for smaller businesses with limited resources. We should be encouraging participation and engagement in the digital asset industry through proactive and supportive regulation, rather than discouraging it through onerous compliance burdens. Furthermore, the proposed amendments fail to consider the global nature of the digital asset industry. A one-size-fits-all approach to regulation may impede the ability of businesses to operate in an interconnected global market. Cooperation and the establishment of international standards could create a more conducive environment for innovation in digital asset technologies while maintaining investor protection. I urge the SEC to reconsider the burden placed on small businesses and startups in the digital asset industry when finalizing the rule. By taking a more nuanced approach that recognizes the unique challenges faced by these entities, the SEC can foster innovation while maintaining important investor safeguards. In conclusion, I commend the SEC's commitment to enhancing investor protections in the advisory industry. However, I believe that the proposed rule, as it currently stands, would place an excessive burden on small businesses and startups operating in the digital asset space. I respectfully urge the SEC to consider the potential impact on these entities and to explore alternative regulatory approaches that balance investor protection and support innovation and growth in the digital asset industry. Thank you for considering my comments on this important matter. Sincerely, Miha