- The SEC has officially withdrawn DeFi exchange and custody rules from the Gensler era.
- The now-dropped rules aimed to classify DeFi as securities exchanges under U.S. law.
- The move signals a shift to a more crypto-friendly stance under new SEC leadership.
The U.S. Securities and Exchange Commission has reversed course on several high-profile crypto rule proposals. These policies were introduced under former Chair Gary Gensler. They targeted decentralized finance platforms and digital asset custody requirements. Published on June 12, official SEC notices confirmed the withdrawals. The changes mark a shift from the stricter regulatory tone set during Gensler’s term.
The most controversial of the dropped rules was a proposed amendment to Exchange Act Rule 3b-16. It was released in April 2023. The rule sought to redefine what qualifies as an exchange under U.S. securities law. This would have brought DeFi platforms under national securities regulations.
Industry leaders criticized the move. Many argued that DeFi needed a separate framework. They said existing rules didn’t apply cleanly to decentralized platforms. Paradigm urged the SEC to start from scratch. They called for open engagement with the DeFi industry before drafting new rules.
Another proposal targeted crypto asset custody. It aimed to force investment advisors to use qualified custodians for client-held crypto. This plan raised concerns across the industry. Critics feared it would reduce the number of banks willing to hold crypto assets. That proposal was put on hold in March 2025. Then-acting Chair Mark Uyeda paused it after strong pushback from market participants.
The announcement made on June 12, 2025, officially confirmed the withdrawal. It also included other Gensler-era proposals unrelated to crypto. These included tighter cybersecurity risk rules for financial firms and enhanced environmental, social, and governance (ESG) disclosure requirements for investment advisors.
Gensler was the head of the SEC from April 2021 to January 2025. His approach often focused on enforcement over new, tailored rulemaking. This created legal confusion for crypto firms. Most of them worked in uncertainty over which laws applied to their activities. The commission’s posture started shifting following the 2024 U.S. election. President Donald Trump returned to office with a more crypto-friendly stance.
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New SEC leadership has since taken steps to rebuild relationships with the blockchain industry. Policy updates reflect this changing tone. Current SEC Chair Paul Atkins recently expressed support for decentralized finance, emphasizing the importance of self-custody in digital finance. He described it as a core American value that must be upheld and safeguarded as new technologies evolve.
The latest withdrawals indicate a significant shift in crypto oversight. The SEC appears ready to rethink its regulatory strategy from the ground up.
