The U.S. Securities and Exchange Commission (SEC) has formally withdrawn several proposed rules introduced during the Biden administration, including two major regulations targeting cryptocurrency custody and decentralized finance (DeFi) platforms.
In a statement released on June 12, the agency announced it is rescinding 14 proposed rules issued between March 2022 and November 2023 under the leadership of former SEC Chair Gary Gensler. Among the scrapped measures are controversial proposals that would have expanded the SEC’s oversight of digital asset markets.
“The Commission does not intend to issue final rules with respect to these proposals,”
the agency said, signaling a change in direction under the current administration. The SEC noted that any future regulatory action would involve fresh proposals.
One of the most consequential reversals is the withdrawal of amendments to Rule 3b-16 under the Exchange Act, which sought to broaden the definition of “exchange” to include DeFi systems. The rule would have categorized platforms using non-firm trading interest and communication protocols to match buyers and sellers as securities exchanges.
Proposed in March 2022, Rule 3b-16 was part of a sweeping effort by the Gensler-led SEC to bring crypto under tighter regulatory scrutiny. However, earlier this year, Republican SEC Commissioner Mark Uyeda had already signaled intentions to shelve the proposal that targeted “alternative trading systems,” including crypto firms.
The SEC has rolled back its proposed Safeguarding Advisory Client Assets rule, which aimed to expand custody requirements for investment advisers managing digital assets. This rule would have required client assets, including cryptocurrencies, to be held by “qualified custodians” such as regulated banks or broker-dealers. Its implementation would have challenged the current crypto custody landscape, potentially forcing advisers to cut ties with unqualified custodians.
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
Coinbase’s Chief Legal Officer Paul Grewal responded to the move on X, stating,
“Down goes 3b16, qualified custodian, and all the other unfinished Gensler rule proposals,”
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