The US Securities and Exchange Commission (SEC) has officially pulled back 14 unfinished rule proposals, including two that would have directly affected how cryptocurrencies are stored and traded.
These proposals were introduced during Gary Gensler’s tenure as agency leader, from March 2022 to November 2023.
On June 12, the SEC stated that it has no plans to finalize those rules and may propose new ones later if necessary.
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One of the scrapped rules, known as Rule 3b-16, would have changed how the SEC defines a securities exchange. The updated definition would have included platforms that use communication tools to connect buyers and sellers, which could have placed many decentralized finance (DeFi) systems under SEC control.
Critics warned that this rule could have forced developers and users of these systems to follow rules meant for large, centralized exchanges.
Another withdrawn proposal focused on tightening rules for how investment firms store customer assets. It was introduced in March 2023 and aimed to expand existing custody rules to cover more types of assets, including cryptocurrencies.
If approved, the rule would have required investment advisers to store all client assets, including digital tokens, with “qualified custodians”. These custodians are usually regulated banks or broker-dealers.
Since many crypto exchanges and wallet providers do not meet the SEC’s definition of a qualified custodian, the rule could have forced investment firms to transfer their clients’ assets to different providers or withdraw from the crypto market altogether.
Meanwhile, SEC Chair Paul Atkins shared an idea called ‘DeFi and the American Spirit’ during a June 9 discussion hosted by the SEC’s crypto task force. What did he say? Read the full story.
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