The U.S. Securities and Exchange Commission (SEC) has abruptly repealed multiple Biden-era crypto regulations, dismantling key proposals that industry leaders and lawmakers criticized as overreach.
The move, announced on June 13, 2025, marks a dramatic shift in the SEC’s approach under Chair Paul Atkins and aligns with President Donald Trump’s pledge to foster “American crypto dominance.”
The Axed Rules: DeFi, Custody, and Exchange Redefinitions
The SEC scrapped 14 proposed rules introduced under former Chair Gary Gensler, including two with major implications for crypto:
Rule 3b-16: Would have expanded the definition of “exchange” to include DeFi protocols, requiring platforms facilitating token trades to register as securities exchanges. Critics argued this could criminalize open-source developers and Discord chat groups.
Enhanced Custody Rule: Mandated investment advisers to hold client crypto assets only with SEC-approved custodians (e.g., banks), sidelining crypto-native firms like Coinbase Custody.
Other repealed measures targeted security-based swaps and climate disclosures, reflecting a broader deregulatory agenda.
Why Commissioners Called It Overreach
SEC documents reveal bipartisan concerns that the rules created vague, unworkable standards.
Rule 3b-16’s 650-page proposal never explicitly mentioned “DeFi” but implied that even Telegram groups coordinating token swaps could be regulated as exchanges. Republican Commissioner Hester Peirce praised the repeal, stating:
“These rules threatened to stifle innovation by punishing developers for writing code. The SEC isn’t Congress—we can’t legislate via enforcement.”
Democrats warned the rollback risks consumer harm, but conceded the proposals lacked clear guidance for compliance.
For DeFi projects, the repeal of Rule 3b-16 is a temporary victory. Platforms like Uniswap and Curve no longer face imminent SEC action, but the lack of clear rules leaves a regulatory vacuum. Some lobbyists worry this could embolden bad actors, while others see an opening for self-policing.
“This isn’t a free pass. DeFi builders still need to engage with regulators or risk future crackdowns.”
— Marta Belcher, Electronic Frontier Foundation
Industry Reactions: Cheers, Caution, and Strategic Shifts
The SEC’s rollback has sparked swift and varied reactions across the crypto landscape. Startups and venture investors are celebrating what they see as a long-overdue win for innovation, predicting a surge in DeFi projects and U.S.-based crypto launches.
Andreessen Horowitz and other major backers have called it a “win for American tech leadership,” expecting renewed momentum for the sector.
However, the mood is more cautious among Wall Street banks and traditional asset managers, who quietly lament the loss of the custody rule that would have funneled more assets into their control.
Legal scholars warn of “policy whiplash,” arguing that such abrupt regulatory shifts create uncertainty for both investors and builders. Industry lobbyists, meanwhile, are pivoting their efforts toward Congress, seeking more stable, statutory clarity to avoid future reversals.
What’s Next for Crypto Regulation? A New Era, but Uncharted Waters
With the Biden-era rules gone, the SEC’s Crypto Task Force is now working on more targeted guidelines, focusing first on clarifying when a token is a security or a commodity. There’s also a push for joint oversight of stablecoins, with the SEC, CFTC, and Treasury aiming for a unified approach that balances innovation with risk management.
Rather than relying on broad enforcement, the SEC is expected to test new tools for market surveillance and fraud detection that won’t hamper DeFi growth. The next year will be pivotal: Congress is preparing hearings, new ETF and DeFi filings are expected, and the industry is bracing for both opportunities and fresh regulatory debates.
The U.S. crypto sector is entering a new phase — freer, but still facing significant uncertainty.
