SEC Officially Withdraws Gensler-Era Proposals Targeting DeFi and Crypto Custody

The US Securities and Exchange Commission (SEC) has formally abandoned several controversial rule proposals from former Chair Gary Gensler’s tenure that aimed to impose stricter regulations on cryptocurrency activities, according to official notices released Thursday.

Among the rescinded measures was a 2023 proposal to amend Exchange Act Rule 3b-16, which sought to expand the definition of an “exchange” to include decentralized finance (DeFi) platforms—effectively placing them under the oversight of national securities exchanges.

The plan faced significant pushback from industry participants, who argued it was overly broad and impractical.

At the time, policy analysts at Paradigm criticized the approach, stating: 

“The SEC must withdraw these amendments and restart the process with a clear, well-defined proposal—one developed through meaningful dialogue with the DeFi community.”