The SEC has repealed Biden-era proposed crypto rules targeting DeFi and custody, signaling a shift in US regulatory direction.
Author: Akshat Thakur
In a major move for digital assets, the U.S. Securities and Exchange Commission has officially withdrawn more than a dozen proposed rules introduced during the Biden administration, including two significant ones impacting DeFi and crypto custody.
The announcement was made on June 13, with the SEC stating it would not move forward with finalizing these rules. If future changes are needed, the agency will issue new proposals under a fresh regulatory direction.
This aligns with President Donald Trump’s broader push to scale back regulatory oversight across both traditional and digital financial sectors.
Among the key repealed rules was the controversial Rule 3b-16, which aimed to broaden the definition of an “exchange” to include decentralized protocols. Originally proposed in March 2022, this rule had alarmed the DeFi industry, as it would have classified many decentralized platforms as securities exchanges.
The rule would have expanded the term “exchange” under the Exchange Act to include:
Coinbase’s chief legal officer, Paul Grewal, responded on X: “Down goes 3b16, qualified custodian, and all the other unfinished Gensler rule proposals.”
Another major repeal was the Safeguarding Advisory Client Assets rule, proposed in March 2023. It aimed to tighten custody standards for digital assets under the Investment Advisers Act of 1940.
Under the proposed rule:
The rule had been heavily criticized for being unworkable in its current form. SEC commissioner Mark Uyeda had hinted at its removal earlier this year.
The SEC crypto rule repeals also included other regulations that affected digital asset managers and fund operators:
These repeals could ease compliance pressure on crypto-native hedge funds and DeFi protocols operating in the U.S.
Despite the deregulatory momentum, CFTC acting chair Caroline Pham made it clear at the Coinbase Annual Summit that the industry would not be given a free pass. She stated:
“Just because we are pro-innovation and pro-growth does not mean that you’re going to be able to get away with breaking the law.”
She also emphasized the Biden administration’s overreach, accusing it of attempting to reshape financial law just to target blockchain technology.
These SEC crypto rule repeals come at a time when legislative clarity appears closer than ever. The CLARITY Act, which passed a key House committee this week, aims to assign clear jurisdiction over crypto markets—most likely to the CFTC.
If passed, it would be a milestone toward ending regulatory uncertainty, especially as Trump administration officials prepare for a broader pro-crypto policy stance.
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