Oct. 30, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on Safeguarding Advisory Client Assets. While I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, there are certain aspects of the proposed rule that may exceed the SEC's regulatory authority, encroaching on areas that should be regulated by other agencies. One particular area of concern is the treatment of digital assets or cryptocurrencies. These innovative financial instruments, built on blockchain technology, have the potential to revolutionize the financial industry. However, regulatory uncertainties surrounding digital assets pose significant challenges to their adoption and development. My concern lies with the SEC's lack of sufficient research into the benefits and potential of cryptocurrencies. It is essential that any regulatory framework governing digital assets is effectively tailored to their unique characteristics. Unfortunately, the proposed rule does not demonstrate the necessary level of expertise and understanding required to formulate appropriate regulations for digital assets. Cryptocurrencies operate in a decentralized and borderless environment, unlike traditional financial instruments. Their global nature presents unique challenges and requires a nuanced regulatory approach. The SEC should collaborate with other relevant agencies that possess the necessary expertise to ensure that the regulation of digital assets is comprehensive and well-informed. Furthermore, the proposed rule should recognize the potential benefits of cryptocurrencies and their role in promoting financial innovation. It is crucial not to stifle the development of this emerging technology through overly burdensome regulations. Instead, the SEC should strive to strike a balance between investor protection and fostering an environment that encourages responsible innovation. I urge the SEC to reconsider the approach taken in the proposed rule and engage in further research and collaboration with industry experts to gain a more comprehensive understanding of digital assets. This will enable the SEC to develop regulations that appropriately address the unique characteristics and challenges posed by cryptocurrencies. In conclusion, while I appreciate the SEC's efforts to enhance investor protections through the proposed rule on Safeguarding Advisory Client Assets, I am concerned about potential overreach of regulatory authority, particularly in the area of digital assets. It is crucial that the SEC conducts further research, collaborates with other agencies, and takes into account the potential benefits of cryptocurrencies to ensure a well-informed and effective regulatory framework. Thank you for considering my comments. I look forward to seeing the SEC address these concerns and develop regulations that both protect investors and promote responsible innovation in the emerging field of digital assets. Sincerely, Joseph Mander