US SEC Withdraws 14 Gensler-Era Proposed Crypto Rules

Highlights:

• SEC cancels 14 crypto-related rules, including DeFi and custody restrictions.
• New SEC leadership shifts toward crypto-friendly policies under the Trump administration.
• SEC Chair Atkins supports self-custody, calling it an important American right.

The United States Securities and Exchange Commission (SEC) has officially pulled back several rule proposals made under former Chair Gary Gensler between March 2022 and November next year. These rules were meant to limit crypto activities but have now been dropped, according to official notices shared on June 12. The SEC said it won’t move forward with these rule proposals. New rules may come later if its plans change. This is part of Donald Trump’s efforts to reduce rules in both crypto and traditional markets.

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SEC Scraps Crypto Rules Targeting DeFi and Asset Custody

Among the 14 rules the SEC dropped was Rule 3b-16. The SEC suggested changes to this rule to expand the meaning of an exchange. The goal was to include decentralized finance (DeFi) platforms under the same rules as traditional exchanges. Many people in the crypto industry opposed the move, saying it could hurt innovation and slow down DeFi’s growth. In this March, acting SEC Chair Mark Uyeda said the rule change should be dropped. It planned to add crypto firms to the meaning of “alternative trading systems.”

The crypto community reacted positively as the SEC dropped several rules. Paul Grewal from Coinbase said it was good to see rules like 3b-16 and custody plans removed. Many believe this shows the SEC is now taking a softer approach.

Down goes 3b16, qualified custodian, and all the other unfinished Gensler rule proposals. @secgov just issued final notices rescinding them all.

— paulgrewal.eth (@iampaulgrewal) June 12, 2025

Another rule that was removed wanted advisors to keep crypto with trusted firms and follow more safety rules. Two year ago, the SEC also proposed the “Safeguarding Advisory Client Assets” rule under the Investment Advisers Act. The rule would have required investment advisers to store all client assets—including crypto—with approved or “qualified” custodians like banks or broker-dealers. 

Because many crypto exchanges and wallets don’t meet the “qualified custodian” standard, advisers would have needed to switch providers or possibly stop handling crypto altogether. In March, Uyeda told his team to explore the option of pulling back the proposed crypto custody rule.

SEC Shifts Approach Under New Leadership

The agency withdrew additional proposed rules on Thursday. These included plans for stronger cybersecurity rules and new ESG (Environmental, Social, and Governance) requirements for investment firms. Gensler led the SEC from 2021 until he stepped down in January. During his time, he mostly focused on enforcement actions instead of clear rulemaking. This approach brought criticism and left many in the crypto industry unsure about the rules they needed to follow.

The SEC started changing its strict approach toward crypto after pro-crypto President Donald Trump was elected. Since then, the agency has been making efforts to better understand and manage crypto-related matters. Recently, SEC Chair Paul Atkins showed support for DeFi. He stated that self-custody is a “core American value” and should be protected in the digital world as well.

JUST IN: SEC Chair Paul Atkins announces he's in favor of Bitcoin & crypto self custody. 👀

"The right to have self custody of ones private property is a foundational American value." 🇺🇸 pic.twitter.com/p9Ne97baxK

— Bitcoin Magazine (@BitcoinMagazine) June 9, 2025

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