In a significant policy shift, the U.S. Securities and Exchange Commission (SEC) has formally withdrawn 14 proposed rulemakings introduced during former Chair Gary Gensler’s tenure. Among the withdrawn proposals were measures that aimed to expand the regulatory definition of securities to cover decentralized finance (DeFi) platforms and impose stricter requirements on digital asset custodians.
This move signals a marked pivot by the SEC from an enforcement-first stance toward a more collaborative, innovation-oriented regulatory approach. According to officials familiar with the decision, the updated strategy aligns with broader policy directives from the Biden administration, which have called for fostering responsible innovation in emerging financial technologies, including blockchain and cryptocurrency.
The now-withdrawn proposals had drawn sharp criticism from the crypto industry and some lawmakers, who argued they risked stifling innovation, lacked clarity, and exceeded the SEC’s statutory authority. Of particular concern were proposals that sought to reclassify certain DeFi protocols as securities exchanges—subjecting them to extensive compliance obligations—and those requiring digital asset custodians to adhere to heightened registration and oversight rules.
In response to industry concerns and shifting political momentum, the SEC appears to be recalibrating its regulatory posture. While enforcement actions will continue where fraud or investor harm is evident, the agency is reportedly exploring more flexible frameworks that allow for experimentation within regulatory boundaries.
The deregulatory momentum follows growing bipartisan support in Congress for clearer crypto legislation and the potential passage of bills such as the FIT21 Act, which aims to provide a more comprehensive regulatory framework for digital assets.
This development marks one of the most consequential reversals in the SEC’s crypto policy in recent years and is likely to have ripple effects across the digital asset market, regulatory strategy, and investor sentiment in the months ahead.
