The US Securities and Exchange Commission (SEC) has formally withdrawn several proposed rules introduced under former Chair Gary Gensler, including measures that aimed to impose greater restrictions on crypto-related activities.

The withdrawals were detailed in official notices published on Thursday.

Among the rescinded proposals was an amendment to Exchange Act Rule 3b-16, issued in April 2023, which sought to broaden the definition of an exchange to include decentralised finance (DeFi) platforms under the oversight of national securities exchanges.

The proposal attracted criticism from multiple industry participants.

According to The Block, policy experts at Paradigm had stated,

“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: with a notice of proposed rulemaking that clearly describes its proposed regulatory approach, after genuine engagement with the DeFi industry.”

Another withdrawn rule aimed to expand the current custody requirements for investment advisers, mandating that crypto assets be held with qualified custodians and introducing additional safeguards.

The proposal had raised concerns that heightened custody standards could deter banks from engaging with the sector.

In March 2025, then-Acting SEC Chair Mark Uyeda instructed agency staff to revisit the custody proposal in response to industry backlash.

Other rules rescinded on June 12 included proposals introduced during Gensler’s tenure that would have required enhanced cybersecurity risk management and environmental, social, and governance (ESG) disclosures from investment firms.

Gensler, who chaired the SEC from 2021 until his departure in January, adopted a “regulation by enforcement” strategy that was frequently criticised for creating legal uncertainty within the crypto sector.

Following the election of pro-crypto President Donald Trump, the SEC has begun shifting away from its previous adversarial posture, taking steps to re-evaluate its approach to digital assets.

Current SEC Chair Paul Atkins recently voiced support for decentralised finance, stating that the right to self-custody is a “foundational American value” that ought to be preserved in the digital age.

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