SEC Withdraws 14 Crypto Rules, Shifts Regulatory Approach

The U.S. Securities and Exchange Commission (SEC) has withdrawn 14 proposed crypto-related rules, marking a significant shift in its regulatory approach towards the cryptocurrency industry. This move, announced on June 12, 2025, under the leadership of Chair Paul Atkins, signals a departure from the aggressive stance adopted under the previous administration of Gary Gensler. The withdrawn proposals, introduced between March 2022 and November 2023, had drawn sharp opposition from crypto advocates, as they sought to expand the SEC's scope over decentralized finance (DeFi) platforms and crypto custody practices.

Two of the rescinded rules would have directly impacted how digital assets are managed and traded in the U.S. One rule sought to expand the definition of securities exchanges to cover DeFi platforms, potentially bringing a wide range of blockchain-based systems under the SEC’s jurisdiction. Another rescinded rule targeted crypto custody practices, requiring investment advisers to store all client assets, including digital assets, with qualified custodians. This would have left only banks and broker-dealers eligible to safeguard assets, as many established crypto custodians would have failed to meet the SEC’s stricter criteria.

Critics argued that these rules would have imposed undue restrictions on the sector, stifling innovation and driving activity offshore. The SEC’s decision to abandon these proposals is part of a broader effort to clarify crypto regulation and aligns with the current administration's deregulatory push to reduce compliance burdens in both traditional and digital markets. In recent months, the SEC has dropped several lawsuits against crypto companies, signaling a retreat from the previous regulation-by-enforcement approach.

The financial regulator’s new Chair, Paul Atkins, has made concrete efforts to introduce pro-crypto regulations, which are expected to foster responsible innovation in the sector. This shift in regulatory approach is likely to create a more favorable environment for the cryptocurrency industry, encouraging innovation and growth while ensuring compliance with regulatory standards. The move is anticipated to revitalize U.S. crypto markets, attracting renewed institutional interest following relaxed regulatory scrutiny. Reduced regulatory pressure by the SEC is thought to encourage institutional engagement, reversing trends of capital migration. The focus shifts towards fostering innovation and clarity in crypto markets.

Financial implications include easing compliance burdens for U.S. crypto businesses, fostering domestic DeFi and custody services. Politically, it aligns with deregulatory goals. Potential outcomes are increased onshore liquidity and returns of talent reminiscent of earlier deregulatory efforts. The shift from aggressive enforcement reflects trends noted under similar historical regulatory withdrawals. The event marks a notable shift, potentially revitalizing U.S. crypto markets, attracting renewed institutional interest following relaxed regulatory scrutiny.