SEC Withdraws Gensler-Era Rules Crypto Executives Hail Victory

The U.S. Securities and Exchange Commission (SEC) has withdrawn several proposed rules that were introduced under the leadership of former SEC Chair Gary Gensler. This move has been met with enthusiasm from crypto executives, who have long criticized Gensler's regulatory approach, particularly his "regulation by enforcement" strategy. The withdrawn rules included proposals related to decentralized finance (DeFi) and custody, which had drawn significant criticism from the crypto industry for their potential to stifle innovation and impose burdensome compliance requirements.

Coinbase CLO Paul Grewal took to X on June 13 to praise the SEC’s decision to officially withdraw many proposed rules that imposed strict regulations, especially DeFi and crypto custody rules. “Down goes 3b16, qualified custodian, and all the other unfinished Gensler rule proposals,” said Grewal as the SEC issued final notices. Bill Hughes, director of global regulatory matters of ConsenSys, also commented on the SEC’s rollback of Gensler-era rules, saying it “feels good.” Joe Lubin, founder of Consensys, earlier argued that digital assets differ from traditional securities and require new regulations.

Other crypto executives including Solana Labs co-founder Anatoly Yakovenko reacted, remarking victory for crypto innovation and easing crypto regulations in the United States. The withdrawal of these rules marks a significant shift in the regulatory landscape for the crypto industry. Executives have expressed relief and optimism, viewing the move as a step towards a more balanced and supportive regulatory environment. The previous proposals had been seen as overly restrictive and not aligned with the unique characteristics of the crypto market. The withdrawal is expected to provide more clarity and flexibility for crypto companies, allowing them to operate with greater certainty and less regulatory burden.

The decision to withdraw the rules comes at a time when the crypto industry is seeking greater regulatory clarity and stability. The previous proposals had created uncertainty and concern among industry participants, who feared that the stringent regulations could hinder the growth and development of the sector. The withdrawal of these rules is seen as a positive development that could foster innovation and attract more investment into the crypto space.

The move by the SEC is also seen as a response to the growing calls for a more collaborative approach to regulation. Industry leaders have long advocated for a regulatory framework that balances the need for consumer protection with the promotion of technological innovation. The withdrawal of the Gensler-era rules is seen as a step in the right direction, as it allows for a more nuanced and flexible regulatory approach that can adapt to the evolving nature of the crypto market.

The withdrawal of the rules is also expected to have broader implications for the regulatory landscape. It signals a shift towards a more collaborative and industry-friendly approach to regulation, which could set a precedent for future regulatory actions. The move is seen as a positive development for the crypto industry, as it provides a more supportive regulatory environment that can foster growth and innovation.

In summary, the withdrawal of the Gensler-era proposed rules by the SEC has been hailed by crypto executives as a positive development. The move is seen as a step towards a more balanced and supportive regulatory environment, which could foster innovation and attract more investment into the crypto space. The withdrawal of the rules is expected to provide more clarity and flexibility for crypto companies, allowing them to operate with greater certainty and less regulatory burden. The move is also seen as a response to the growing calls for a more collaborative approach to regulation, which could set a precedent for future regulatory actions.