Oct. 30, 2023
To Whom It May Concern, I am writing to comment on the proposed custody rules and their potential impact on decentralized finance (DeFi) innovation. While protecting investors is important, rigid unilateral rules could pressure protocols to contradict the ethos of decentralization. Many DeFi protocols are built for seamless global interoperability by design. However, expansive compliance duties optimized for centralized systems may essentially coerce protocols into installing access controls and identity checkpoints. This pressures innovation towards centralized architectures, undermining core values of open access. Rather than a siloed approach, I suggest the SEC collaborate with international regulators to develop aligned standards that don’t force decentralization to cede to centralization pressures. Thoughtful globally unified regulations can allow innovation to flourish, preserving permissionless access that is vital to this new paradigm. I respectfully ask U.S. regulators to consider the unintended consequences rules crafted in isolation may have in shaping the growth of this technology worldwide. With cooperation, we can encourage prosperity and protection simultaneously. Thank you for your consideration and continued efforts to responsibly modernize regulations for emerging technologies. With all due respect, Christopher