Oct. 31, 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, I believe certain aspects of the proposed rule may exceed the regulatory authority of the SEC and encroach on areas that should be regulated by other agencies. One area of concern is the treatment of digital assets or cryptocurrencies. The proposed rule aims to address the challenges posed by these emerging technologies, but regulatory uncertainties still loom large. It is important that any regulations pertaining to digital assets strike a careful balance between promoting innovation and protecting investors. By imposing overly burdensome requirements, there is a risk of stifling innovation in this transformative field. Furthermore, the proposed rule's application to crypto assets raises questions about its compatibility with existing laws and regulations. The regulatory landscape surrounding digital assets is still evolving, and it is crucial for the SEC to engage with other agencies, such as the Commodities Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN), to ensure a coordinated approach that avoids duplication and conflicting rules. I urge the SEC to exercise caution and seek input from relevant stakeholders when developing regulations for digital assets. Collaboration with other regulatory bodies will ensure comprehensive oversight while avoiding any potential overreach of regulatory authority. In addition to the concerns specific to digital assets, I believe the proposed rule in its entirety warrants a thorough review to ensure it remains within the SEC's purview. It is essential that the SEC focuses on its core mission of protecting investors and maintaining fair and efficient markets. While safeguarding client assets is a crucial aspect of investor protection, it is equally important to consider the role of other agencies in the regulatory landscape. I appreciate the SEC's commitment to economic analysis, which acknowledges the challenge of estimating economic effects due to varying practices among investment advisers. It is imperative that the SEC carefully consider the costs and benefits of the proposed rule and its potential impact on efficiency, competition, and capital formation. Furthermore, the SEC's request for comments and input on reasonable alternatives is commendable. It provides an opportunity for stakeholders to offer insights and propose innovative solutions that strike a better balance between investor protection and compliance costs. I encourage the SEC to take these comments seriously and consider all reasonable alternatives. In conclusion, the proposed rule on "Safeguarding Advisory Client Assets" raises concerns about potential overreach of regulatory authority, particularly in the context of digital assets. I urge the SEC to collaborate with other agencies when developing regulations for digital assets and to ensure that the proposed rule remains within its mandate of investor protection and maintaining fair and efficient markets. Thank you for considering my comments. I hope that the SEC continues to engage with the public and seek input to craft regulations that strike a balance between protecting investors and fostering innovation. Sincerely, Chris