On June 12, 2025, the US Securities and Exchange Commission (SEC) stated that it is formally rescinding 14 crypto focused rule proposals put forth under the leadership of former Chair Gary Gensler. This represents a significant policy change under current Chair Paul Atkins and sends a clear signal: the SEC will move from aggressive enforcement of the rules, to a clearer rule based regulatory scheme over digital assets.
The Gensler Era: Ambition Meets Backlash
Between March 2022 and November 2023, the SEC proposed policies aimed squarely at the crypto sector. Among them were two headline measures: Rule 3b 16, designed to redefine “exchange” to include DeFi protocols, front end interfaces, and even chat tools; and expanded crypto custody requirements, aimed at tightening who could safeguard digital assets.
At the time, critics — including Coinbase’s Chief Legal Officer Paul Grewal — warned that these rules would stifle innovation, push developers offshore, and disqualify many crypto custodians. “Down goes 3b16, qualified custodian…” Grewal tweeted upon the SEC’s official notice.
Shift in Tone: Courts to Comment
Under Paul Atkins’ leadership—who took office on April 21, 2025—the agency has pledged to embrace “notice-and-comment” rulemaking, moving away from the previous enforcement-first approach. In a June 9 roundtable, Atkins stressed that crypto developers shouldn’t be punished for merely writing code, an emphasis he repeated when announcing a potential “innovation exemption” for DeFi platforms.
What Was Withdrawn—And Why It Matters
- Rule 3b 16 would have reclassified practically any decentralized platform — from smart contract protocols to chat apps facilitating trades — as securities exchanges.
- The expanded Custody Rule imposed banking grade safeguards and would have excluded most crypto custodians, forcing client assets into the hands of banks and broker dealers.
Pulling these proposals back relieves pressure on DeFi developers, exchanges, and asset managers. Financial media, including CryptoSlate and BeInCrypto, point to the decision as a critical step to support innovation and reverse Gensler’s restrictive tone.
A More Pro Crypto Agenda?
The rollback aligns with broader policy shifts under President Trump’s second term. The SEC has dropped lawsuits against major crypto players—including Binance and Coinbase—and plans to establish a national crypto task force to craft rules tailored to token markets. Meanwhile, Congress is also advancing frameworks like the CLARITY Act and FIT21, aiming to define who regulates what in digital finance.
What Comes Next?
- Formal rulemaking: The SEC will use formal processes to draw rules—not courts.
- Innovation exemptions: Developers may soon be able to experiment under protected status.
- Collaborative regulation: Ongoing debates, like how to share authority between SEC and CFTC, are entering Congress.
Final Word
The SEC’s removal of 14 Gensler-era crypto proposals represents more than an administrative cleanup—it’s a strategic realignment. With Paul Atkins at the helm, the agency is signaling openness to digital finance, promising clarity, injective rulemaking, and a willingness to embrace innovation. For those counting on crypto’s future in America, the message is clear: the path forward just got brighter.
