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06/13 10:36

SEC withdraws Custody Rule and other Gensler-era p

SEC withdraws Custody Rule and other Gensler-era proposals; a major win for the crypto industry?

The SEC has withdrawn several controversial proposals, including the Custody Rule and Rule 3b-16. How will this help the crypto industry?



Highlights

The SEC has withdrawn key Gensler-era proposals, such as the Custody Rule.

Experts say these rules could hinder the development and innovation of the crypto industry.

The crypto industry sees this as a major victory and looks forward to regulatory reforms.

The SEC has withdrawn several high-profile proposals proposed during Gary Gensler's tenure, a crucial development for the crypto industry. According to an X post shared by Eleanor Terrett, the withdrawn proposals include the controversial Custody Rule and Rule 3b-16. Is this a major win for the crypto industry?

SEC abandons Custody Rule and other important proposals

As FOX Business reporter Eleanor Terrett revealed in an X post, the SEC has scrapped several proposed rules that sparked heated debate and criticism.  The rules, proposed under former SEC Chairman Gary Gensler and under the Biden administration, were intended to restrict cryptocurrency-related activities.

One notable proposal that the SEC dropped was the Custody Rule. Under the Custody Rule, “an advisor has custody of client assets and, therefore, must comply with this rule when it holds, directly or indirectly, client funds or securities, or [has] any power to acquire title to those assets.”

Notably, the dropped proposal would have expanded the Custody Rule to require investment advisors to hold crypto assets with a qualified custodian and strengthen asset protections. Critics have argued that this could exacerbate banking industry reluctance to serve cryptocurrency companies, further limiting their access to traditional financial services.  

The SEC also dropped a proposal for Rule 3b-16 of the Exchange Act, which would have required “exchanges” to register as national securities exchanges or broker-dealers and comply with Regulation ATS.  “Rule 3b-16 proposes that DeFi exchanges/platforms could be regulated as national securities exchanges,” Terrett wrote.

In addition, the SEC also withdrew proposals related to strengthening cybersecurity risk management and ESG (environmental, social and governance) reporting requirements for investment companies. This move coincides with the SEC’s latest move on altcoin ETFs. The SEC announced a delay in its decision on the Grayscale spot Hedera ETF. 

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