Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to share my concerns regarding the proposed rule on "Safeguarding Advisory Client Assets" and its potential negative impact on investor access to digital assets, particularly in relation to cryptocurrencies. While I appreciate the Securities and Exchange Commission's efforts to enhance investor protections and address gaps in the custody rule, it is imperative to consider the unique characteristics of digital assets and ensure that regulations do not unnecessarily restrict investor access to this emerging asset class. Digital assets, such as cryptocurrencies, have been disruptive innovations in the financial industry, driven by blockchain technology. They offer new opportunities for investors, enabling them to participate in decentralized financial ecosystems and potentially achieve greater financial inclusivity. However, due to their unique nature, existing regulations struggle to keep pace with the rapid evolution of digital assets. This gap in regulatory clarity poses challenges for both investors and industry professionals. One of my key concerns is the limited input from cryptocurrency professionals in the development of these proposed regulations. Digital assets require a nuanced understanding of their underlying technology, market dynamics, and associated risks. To ensure that regulations inhibit neither technological progress nor investment potential, it is crucial that you seek comprehensive input from professionals experienced in the digital asset space. Their expertise and insights can contribute to striking a balance between investor protections and enabling innovation. Furthermore, any proposed rules concerning digital assets should be carefully crafted to prevent unnecessary barriers to investor access. Cryptocurrencies have the potential to promote financial inclusivity by enabling individuals without access to traditional banking services to participate in the global economy. Restrictive regulations that limit investor access to digital assets would be counterproductive to this goal. Rather than imposing overly burdensome regulations that stifle market growth, I urge the SEC to adopt a flexible and adaptive approach. This approach should be rooted in ongoing engagement with industry professionals, investors, and regulators, allowing for collaborative efforts to find practical and effective solutions. A balanced regulatory framework that promotes innovation and maintains sufficient investor protections will be vital for the long-term success and sustainability of digital assets. In conclusion, while I recognize the importance of safeguarding advisory client assets, it is imperative that the proposed rule on "Safeguarding Advisory Client Assets" carefully considers the unique characteristics of digital assets and seeks sufficient input from industry professionals. Striking the right balance between investor protections and facilitating investor access to digital assets will be crucial for the growth and development of this emerging asset class. I urge the SEC to ensure that regulations do not impede the potential of digital assets and to foster an environment that encourages innovation while maintaining investor protections. Thank you for considering these concerns. I appreciate the opportunity to provide input on this important proposal. Sincerely, Jon Smith