Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to provide my public comment on the proposed rule "Safeguarding Advisory Client Assets." As an investor concerned about the protection of client assets, I believe it is important to address the lack of clarity on the definition of digital assets and the potential risks associated with them. The proposed rule aims to enhance investor protections and provide comprehensive rules on safeguarding client assets. While I appreciate the SEC's efforts to modernize regulations in light of emerging digital assets, I find that the proposal falls short in providing clear guidance on what constitutes a digital asset. This lack of clarity has the potential to create confusion and misinterpretation among investment advisers, which may ultimately undermine investor protections. Digital assets are an increasingly prevalent and transformative force in the financial industry. Cryptocurrencies, built on blockchain technology, have the potential to revolutionize finance, but their regulatory status remains uncertain. Without clear guidelines on how digital assets should be treated and safeguarded, investors may be exposed to unnecessary risks. Therefore, it is imperative for the SEC to provide an explicit definition of digital assets and establish a framework for their safeguarding. In order to address these concerns, I urge the SEC to collaborate with industry experts, stakeholders, and market participants to develop a clear and comprehensive definition of digital assets. This definition should encompass various forms of digital assets, including cryptocurrencies, tokens, and other blockchain-based assets, taking into account their unique characteristics and risks. Furthermore, the SEC should provide guidance on the appropriate custody arrangements and controls for digital assets. Given the technical complexities and potential vulnerabilities associated with digital assets, it is crucial to establish robust custody practices that ensure the security and integrity of investor holdings. This should include guidelines on securing private keys, implementing multi-signature wallets, and engaging qualified custodians with expertise in digital asset security. Additionally, the SEC should consider the need for enhanced disclosure requirements for investment advisers handling digital assets. Investors deserve transparency and information regarding the risks associated with digital asset investments. By requiring advisers to provide detailed disclosures, investors can make informed decisions and better understand the risks involved in these emerging asset classes. Lastly, the SEC should explore the possibility of leveraging technological advancements such as blockchain itself to enhance the safeguarding of digital assets. Distributed ledger technology and smart contracts have the potential to streamline custody processes, enhance transparency, and improve accountability. By actively engaging with innovative solutions, the SEC can promote investor protection while embracing the potential benefits of digital assets. In conclusion, I strongly urge the SEC to address the lack of clarity on the definition of digital assets and develop comprehensive rules for their safeguarding. By providing clear guidance and regulations, the SEC can foster an environment that promotes investor protection and harnesses the potential benefits of digital assets. Thank you for considering my comments. Please feel free to reach out if you have any further questions or require additional information. Sincerely, Gabriel J Rocha