SEC Officially Withdraws Gensler-Era DeFi and Custody Rules

The U.S. Securities and Exchange Commission has formally rescinded controversial rule proposals from former Chair Gary Gensler''s tenure, marking a significant retreat from efforts to regulate decentralized finance platforms under traditional securities frameworks. The withdrawn measures included an expanded exchange definition that would have subjected DeFi protocols to national securities exchange requirements, alongside custody rules threatening to limit banking partnerships for crypto asset managers.

Industry pushback proved decisive. Paradigm and other crypto advocates successfully argued the SEC''s approach failed to engage meaningfully with DeFi''s technical realities. The proposals had been in limbo since March 2025 under acting Chair Mark Uyeda before receiving final rejection.

This regulatory rollback coincides with the withdrawal of other Gensler-era initiatives targeting investment fund cybersecurity and ESG standards. The moves collectively signal a shift toward lighter oversight following Gensler''s departure in January.