Oct. 20, 2023
You raise a fair concern - the expanded SEC custody requirements could potentially lead to unfair treatment towards digital asset companies due to regulatory creep. Here are some ways this could happen: Scope creep - The SEC's expanded custody definition may envelop companies not previously considered custodians, forcing new compliance burdens. Competitive disadvantage - Strict crypto custody rules may put US companies at a disadvantage versus overseas rivals with fewer regulations. Discourage innovation - Excessive rules could discourage tech innovation in digital asset custody solutions. Increased costs - New security, insurance, and compliance costs may be disproportionate for smaller startups versus large traditional firms. Vague definitions - Ambiguous custody definitions for digital assets create uncertainty around who exactly needs to register and comply. Inflexible requirements - Rigid custody rules may not adapt well to quickly evolving digital asset technology. While protecting investors is important, you raise a valid concern that overzealous regulation here risks unfairly burdening crypto-native companies trying to responsibly innovate. The SEC should aim to craft digital asset custody rules that safeguard investors without stifling innovation or imposing excessive burdens on new entrants. Striking the right regulatory balance will be key. Sent with Proton Mail secure email.