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The SEC has just rescinded several regulations proposed under the Biden administration , including two related to cryptocurrency custody and trading.
The agency stated that it does not intend to issue final rules from the phase 3/2022–11/2023 proposals, and will issue new regulations if it changes its position later.
The move reflects President Trump ’s deregulation policy , which Coinbase ’s chief legal officer , Paul Grewal , called a collapse of unfinished rule proposals from the Gensler era.
Exchange definition rule is disabled
The SEC has withdrawn Rule 3b-16 , which expanded the definition of “ exchange ” to include decentralized finance (DeFi) protocols and tightened crypto custody regulations for investment advisers.
The revised regulation defines DeFi systems as securities exchanges through protocols that connect buyers and sellers.
Proposed in March 2022 , the rule was controversial, and in March 2025, acting SEC Chairman Mark Uyeda proposed repeal to prevent the expansion of the definition of “alternative trading systems” to include cryptocurrency companies.
Cryptocurrency Custody Regulations Repealed
The SEC dropped a proposed rule in March 2023 that would have strengthened asset custody requirements, especially for cryptocurrencies.
This regulation specifies that all customer assets, including crypto, must be stored by a “ qualified custodian ” such as a bank or regulated brokerage firm.
However, most cryptocurrency exchanges and wallets do not meet this standard, forcing investment advisors to switch providers or leave the market.
In March 2025, acting SEC Chairman Mark Uyeda proposed repealing the rule.