TL;DR
- The U.S. Securities and Exchange Commission (SEC) has officially withdrawn several regulatory proposals introduced under former Chair Gary Gensler, including rules targeting DeFi platforms and crypto asset custody.
- These measures, criticized for being overly strict, were abandoned following expert backlash and a change in leadership.
- The decision signals a shift toward a more collaborative and less restrictive approach to the crypto ecosystem.
With the official release of its decision, the SEC nullified a set of proposals that had created tension between the agency and the digital asset industry. Among them was a proposed change to “Exchange Act” Rule 3b-16 that aimed to broaden the definition of “exchange,” effectively bringing many decentralized finance (DeFi) platforms under the same regulatory framework as traditional exchanges. Experts at Paradigm criticized the initiative, arguing that any effective regulation of the sector must begin with clear communication and real engagement with the technology community.
Direction Shift Driven By New Leadership
Another now-withdrawn rule aimed to mandate that investment advisers could only custody crypto assets through qualified custodians. This requirement threatened to exclude several well-established crypto custodians, further narrowing the already limited banking access for crypto projects. Initially suspended in March 2025 by then-Acting Chair Mark Uyeda, the proposal was widely criticized for stifling innovation under the guise of investor protection.
Since the appointment of the SEC’s new Chair, Paul Atkins, the agency has taken a noticeably less hostile stance toward the digital asset space. Atkins has publicly affirmed his support for individual sovereignty over asset custody, calling it a foundational right that must be preserved in digital environments as well. Analysts also emphasize that this shift may pave the way for a regulatory framework that is more technically informed, proportionate, and better aligned with the evolving crypto ecosystem. Current leadership appears more willing to understand the technological nuances of decentralized protocols and their global nature.
Balanced Regulatory Push Benefits the Ecosystem
This change in direction aligns with President Donald Trump’s administration, which has embraced a more crypto-friendly regulatory philosophy and has moved to reassess policies previously deemed overly burdensome. In recent months, the SEC has also dropped lawsuits against several crypto firms, signaling a clear departure from the “regulation by enforcement” strategy pursued under Gensler.
This new landscape points to a more realistic and open regulatory approach that acknowledges the value of decentralized financial innovation. The industry now hopes this trend will result in clear, predictable rules built in collaboration with subject-matter experts. The withdrawal of these proposals sets an encouraging precedent for blockchain technology development in the United States.
