According to The Block, the U.S. Securities and Exchange Commission (SEC) announced in an official statement released on Thursday that it has officially rescinded several regulatory proposals put forth during the tenure of former Chair ### Gary Gensler, which were originally intended to restrict activities related to cryptocurrencies.
This includes the proposed amendment to Rule 3b-16 of the Securities Exchange Act introduced in April 2023, aimed at expanding the definition of “exchange,” specifically to bring decentralized finance platforms under the regulatory scope of national securities exchanges. This proposal faced significant criticism from industry professionals at the time.
Related report: SEC extends its reach to DeFi! Proposed expansion of the definition of “exchange” requires compliance for decentralized financial activities.
Another rescinded proposal involved expanding the existing custody rules, requiring investment advisors to have their crypto assets held by qualified custodians and to provide additional protective measures. There are concerns that this rule would broaden the application of stricter custody regulations to advisors holding crypto assets, potentially further diminishing the willingness of banks to collaborate with the crypto industry.
Other rescinded proposals announced on Thursday included several initiatives presented during Gensler’s tenure, such as requirements for investment companies to enhance cybersecurity risk management and ESG requirements.
Gensler served as SEC Chair from 2021 until his departure in January 2025, and his enforcement-oriented regulatory approach faced widespread criticism, frequently placing the crypto industry in a position of legal uncertainty. Following the election of Donald Trump, who supported cryptocurrency, and the issuance of executive orders aimed at clarifying crypto regulations, the SEC began to adjust its previously hardline stance on the crypto industry and actively address related regulatory issues.
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