DeFi Gets a Boost as SEC Axes Gensler-Era Crypto Regulations
The U.S. Securities and Exchange Commission (SEC) announced on June 12, 2025, the withdrawal of several proposed cryptocurrency regulations from the Biden administration, a decision that reduces regulatory hurdles for the digital asset industry.
The decision, as part of a general withdrawal of 14 proposals, targets rules affecting decentralized finance (DeFi) and digital asset custody.
What Rules Got the Axe? Inside the SEC Crypto Rollback
The SEC withdrew rules proposed between March 2022 and November 2023, during the time of former Chair Gary Gensler, known for his strict regulatory approach.
Among the regulatory rules rescinded is Rule 3b-16, proposed in March 2022, which sought to redefine “exchange” to include DeFi protocols, subjecting them to stricter oversight and strengthening custody provisions for crypto investment advisers.
Another key proposal, the Safeguarding Advisory Client Assets rule from March 2023, called for digital assets to be custodied by “qualified custodians,” such as regulated banks or broker-dealers, a requirement criticized as restrictive by crypto firms.
The agency also dropped additional proposals affecting crypto fund managers, digital asset custodians, and companies with substantial crypto derivatives exposures.
The SEC’s rulemaking activity page confirms these actions, with final notices issued on June 12, 2025, stating no final rules will be adopted, though the door remains open for future proposals.
Market Eyes Growth After SEC’s Crypto Rule Reversal
The crypto industry and communities are in alignment with the agency’s decision.
Following the official announcement, Coinbase Chief Legal Officer Paul Grewal posted on X, stating, “Down goes 3b16, qualified custodian, and all the other unfinished Gensler rule proposals.”
Some community members described the decision as a “win for American innovation,” showing the widespread relief across the industry. The withdrawals are expected to lower compliance costs, potentially promoting growth in DeFi and custody services.
This development is also in line with President Trump’s January 2025 executive order, “Strengthening American Leadership in Digital Financial Technology,” which revoked Biden-era cryptocurrency regulations and policies.
The SEC’s Crypto Task Force, reinstated in January 2025 under Commissioner Hester Peirce, also points in the direction of more balanced regulation, though the possibility of future proposals presents some uncertainty.
