Oct. 30, 2023
To the SEC, I am writing with concerns that proposed custody rule amendments, while aiming to protect, may also unduly restrict financial freedoms by limiting decentralized finance (DeFi) integration. Rigid requirements conflict with principles of self-sovereignty and access that make DeFi appealing. For example, mandatory qualified custodians directly inhibit client participation in innovative protocols like Uniswap that enable direct peer-to-peer exchange without intermediaries. Overly prescriptive controls on transferring assets between custodians and DeFi protocols also infringe on client financial autonomy. Investors should have the freedom to earn yields through staking and other on-chain activities requiring unencumbered access. Excessive regulation aimed at protection risks going too far by preventing investors from exercising personal financial choices. Rules should evolve responsibly alongside cryptocurrency asset management to uphold freedoms as well as protections. I urge the SEC to carefully balance investor protections with safeguarding the financial independence and decentralization underpinning DeFi innovation. With flexibility and tailored guidance, advisers can integrate DeFi beneficially without limiting client freedoms. Thank you for your consideration. I believe we share the goal of responsibly expanding financial access and freedom through blockchain technology. Yours sincereley, Michael Sugden