SEC Rolls Back Gensler-Era Crypto Rules Amid Policy Reversal

In a significant policy reversal, the U.S. Securities and Exchange Commission (SEC) has officially withdrawn a series of crypto-related rule proposals originally introduced under former Chair Gary Gensler. The decision, made public on Thursday through a set of agency filings, marks a notable shift in the regulator’s posture toward the digital asset industry.

Among the rescinded proposals was a controversial 2023 amendment to Exchange Act Rule 3b-16. The amendment aimed to expand the definition of a securities exchange to include decentralized finance (DeFi) platforms, effectively bringing them under the oversight of national securities exchanges. The proposal was widely criticized for its potential to stifle innovation and for a perceived lack of clarity.

Industry voices, including the policy group Paradigm, had previously urged the SEC to abandon the effort entirely. “The only way for the Commission to arrive at a valid regulatory approach to DeFi is to withdraw its proposed amendments and start again at square one,” Paradigm noted, calling for transparent engagement with the crypto ecosystem.

Also withdrawn was a rule that would have tightened custody regulations for investment advisors holding crypto assets. That proposal sought to require such advisors to use only “qualified custodians,” raising alarm over the potential chilling effect on banks servicing crypto clients.

Pushback mounted over the past year, leading then-Acting SEC Chair Mark Uyeda to halt the process in March 2025 for further review. The Thursday notices also included the cancellation of other proposals from Gensler’s tenure, such as mandates for stricter cybersecurity and ESG disclosures for investment firms.

Gensler, who chaired the SEC from 2021 until his departure in January 2025, had embraced a tough “regulation by enforcement” stance, drawing sharp criticism from the crypto industry for creating uncertainty and deterring responsible development.

The regulatory about-face coincides with the political ascent of President Donald Trump, who has promoted a more crypto-friendly agenda. New SEC Chair Paul Atkins has echoed that tone, voicing strong support for decentralized technologies and self-custody rights. “The right to self-custody is a foundational American value,” Atkins said recently, signaling a more cooperative approach to digital asset policy.

The withdrawals suggest that the SEC is rethinking its entire strategy toward crypto regulation—possibly opening the door to new frameworks built in consultation with the industry itself.