SEC drops 14 proposed rules that aimed to tighten control over crypto and DeFi platforms.
New SEC leadership shifts focus to reduce rules in crypto and support digital self custody.
Crypto industry sees the move as a sign of softer regulation and clearer guidance ahead.
The United States Securities and Exchange Commission has formally dropped 14 proposed regulations, some of which were aimed at cryptocurrency. The reversal applies to proposals submitted by the previous SEC Chair Gary Gensler. The agency confirmed the withdrawal in notices published on June 12.
https://twitter.com/iampaulgrewal/status/1933296681358856336 Rule Changes Targeted Crypto and DeFi
Among the rules dropped was the proposed amendment to Rule 3b-16. The SEC had aimed to expand the definition of an exchange. This change would have brought decentralized finance platforms under the same regulations as traditional exchanges. Industry stakeholders had expressed concern over this plan. They argued it could slow innovation and impact the growth of the DeFi sector.
Another proposed rule targeted investment advisers. It would have required them to store digital assets only with qualified custodians, such as banks or broker-dealers. Many crypto platforms do not meet those standards. As a result, advisers might have needed to switch service providers or stop managing crypto altogether. The SEC has now dropped this proposal.
Regulatory Shift Aligns With New Administration
This shift comes as part of a broader regulatory change under President Donald Trump's administration. The new leadership seems to be aiming to lower the regulatory burden in the crypto and traditional financial markets. The acting SEC Chair Mark Uyeda had previously indicated that the regulator would reconsider a number of proposals related to crypto.
The new SEC Chair, Paul Atkins, has also indicated a more supportive stance toward the crypto industry. Specifically, the agency appears to be more accommodative of DeFi and self-custody models currently. This is unlike the enforcement-heavy approach that characterized the tenure of Gensler, which started in 2021 and lasted until January.
Additional Rules Also Pulled Back
In addition to the crypto-related provisions, the SEC also withdrew other outstanding regulations. These covered cybersecurity requirements targeted at financial institutions and ESG (Environmental, Social, and Governance) reporting. The ESG proposal would have mandated investment advisers to report on practices relating to sustainability.
The amendments are part of a larger reevaluation of rulemaking priorities. SEC is putting various initiatives on hold as it contemplates new directions. Though these proposals are no longer progressing, the agency can repackage amended proposals in the future.
The move has been received well by the crypto industry. It is perceived by many as a step towards greater clarity and fairness. The withdrawal of these rules signals a possible softening of the SEC's position on digital assets.