SEC Shakes Up Crypto World: Major Policy Reversal Ditches Biden-Era Rules!

14 Proposed Regulations Axed, Including Crypto Custody and DeFi Oversight

Hold onto your hats, crypto fans! The U.S. Securities and Exchange Commission just flipped the script on Biden-era policies, yanking back key measures aimed at crypto custody and decentralized exchanges. It's a wild turn of events, and the industry's buzzing!

On Thursday, the SEC dropped a bombshell, confirming they're pulling the plug on a whopping 14 proposed rules that were introduced between March 2022 and November 2023. These rules were all about cranking up regulatory oversight on digital assets, but now? They're history.

In a notice that's got everyone talking, the SEC declared they're "withdrawing certain notices of proposed rulemaking." And get this—they're not even planning to issue final rules on these matters. Talk about a U-turn!

"If the Commission decides to pursue future regulatory action in any of these areas, it will issue a new proposed rule," the SEC stated. Sounds like they're leaving the door open, but for now, it's slammed shut on those old proposals.

One of the big-ticket items getting the axe was the proposed amendment to Rule 3b-16 under the Exchange Act. This rule was all set to redefine what counts as an "exchange" under federal securities laws. Big changes were on the horizon, but not anymore.

That amendment, which first hit the scene in March 2022, was gearing up to stretch the definition of an exchange to include comms systems that help with crypto and DeFi trading. It was a game-changer, but it's out of the game now.

Critics were sounding the alarm that the language in Rule 3b-16 could've slapped many DeFi platforms with the label of regulated securities exchanges. Even if they were just offering protocols for buyers and sellers to connect without middlemen, they could've been caught in the regulatory net. But that's all in the past now.

Another casualty of this shake-up? The proposed Safeguarding Advisory Client Assets rule. This one, rolled out in March 2023, was all about tightening the screws on custody requirements for registered investment advisers. They wanted all client assets, crypto included, to be parked with a "qualified custodian." But guess what? Most crypto-native custody providers didn't fit the bill, leaving advisers scratching their heads about their options in the digital asset world.

This rollback isn't just about these specific rules—it's a sign of a bigger shift within the SEC. Under the Trump administration, the commission's steering away from enforcement-heavy policies and leaning into what they call a "constructive" regulatory approach. It's a whole new vibe!

Leading this charge is SEC Chair Paul Atkins, a former commissioner who's all about limited government intervention. Since taking the helm in April, Atkins has been steering the agency away from enforcement-led strategies and toward clearer, innovation-friendly policies. It's a breath of fresh air for the industry!

As part of this major overhaul, the SEC set up a new Digital Assets Task Force to rethink their whole approach to crypto oversight. And within weeks, this task force was already making moves, closing down several high-profile investigations. We're talking about cases involving Coinbase, Kraken, ConsenSys, Yuga Labs, and OpenSea, just to name a few. The crypto world is feeling the impact!