If you play him every day and have good ML coaches he should continue to develop as he normally would. So if development is your only issue, in theory you should be ok.
If you're looking to hold back his arb clock, and he has good makeup and patience ratings, a demotion shouldn't be too bad. He'll probably regain whatever ratings he loses fairly quickly if he's only in his 2nd season. I personally never try to demote key players but the one time I did, the guy had good patience and makeup and actually didn't lose anything (or at least nothing significant from what I remember).