Oct. 31, 2023
Dear Securities and Exchange Commission, I am writing to express my concerns regarding the proposed rule on the safeguarding of advisory client assets. While I acknowledge the importance of enhancing investor protections and addressing gaps in the custody rule, there are several issues that need to be addressed to ensure fair and effective regulation. One area of concern is the lack of clarity on the definition of digital assets. The proposal fails to provide clear guidance on what constitutes a digital asset, leading to confusion and potential misinterpretation. Given the rapidly evolving nature of digital assets, it is essential to have a comprehensive and well-defined framework that can adapt to technological advancements. Without clear definitions, both investment advisers and clients may face challenges in complying with the rule and understanding their rights and responsibilities. Furthermore, the proposal's approach to regulating digital assets appears to be based on biased and irrelevant information. It is crucial to take a balanced and informed approach when regulating innovative technologies like cryptocurrencies. The proposal should fully explore the potential benefits that digital assets can bring to the financial industry, such as increased efficiency, accessibility, and financial inclusion. Relying on outdated or biased information may hinder the development and adoption of these technologies, ultimately disadvantaging investors and stifling innovation. Additionally, I have reservations about the suitability of Gary Gensler as the SEC chair. I believe that his track record raises serious concerns about his ability to effectively regulate complex and rapidly evolving technologies like digital assets. Gensler's past failures and controversial decisions in relation to cryptocurrencies do not inspire confidence in his ability to provide fair and balanced regulation. It is essential to appoint individuals with a deep understanding of blockchain technology and cryptocurrencies, as well as a commitment to fostering innovation while protecting investors. Furthermore, the proposal should consider the potential unintended consequences of overly burdensome regulation on the growth and development of the digital asset industry. Excessive regulation can stifle innovation and drive businesses to more favorable jurisdictions, depriving the US of the economic benefits that these technologies can bring. The SEC should seek to strike a balance between investor protection and fostering a conducive environment for innovation, recognizing the transformative potential of digital assets in the financial industry. In conclusion, while I appreciate the SEC's efforts to enhance investor protections and address gaps in the custody rule, the proposed rule on safeguarding advisory client assets requires further consideration and revision. I urge the SEC to clarify the definition of digital assets and to adopt a balanced and informed approach to regulating these innovative technologies. Furthermore, I believe that appointing individuals with a deep understanding of blockchain technology and cryptocurrencies is essential for effective regulation in this realm. Finally, it is crucial to strike a balance between investor protection and fostering a conducive environment for innovation. Thank you for considering my concerns, Yana Volk