SEC Crypto Rules Reversal 3 Shocking Wins for Blockchain

Key Points

• SEC Crypto Rules Reversal 3 Shocking Wins for Blockchain
• SEC reverses Rule 3b-16 and expanded Custody Rule
• Coinbase CLO Paul Grewal hails the move as a win for innovation
• Decision signals shift toward a pro-crypto US regulatory stance
• Industry sees end to Gensler-era regulatory overreach

The US crypto industry just scored a major victory. The Securities and Exchange Commission (SEC) has officially reversed several controversial rules that once threatened the future of blockchain innovation in America.

Coinbase’s Chief Legal Officer (CLO), Paul Grewal, quickly praised the move, calling it a big step forward for the industry.

This marks a sharp pivot under the SEC’s new leadership, now aligned with President Trump’s pro-crypto agenda. It could be the start of a more open, innovation-friendly era for crypto in the US.

Down goes 3b16, qualified custodian, and all the other unfinished Gensler rule proposals. @secgov just issued final notices rescinding them all.

— paulgrewal.eth (@iampaulgrewal) June 12, 2025

SEC Reverses Key Crypto Rules from Gensler’s Era

Under former SEC Chair Gary Gensler, two major rules—Rule 3b-16 and the expanded Custody Rule—had sparked intense backlash across the crypto community.

Rule 3b-16 sought to redefine what counts as an “exchange.” If passed, many DeFi (Decentralized Finance) platforms and blockchain protocols would have faced the same regulatory burdens as traditional stock exchanges. Industry leaders feared this would have stifled innovation and driven crypto builders out of the US.

The expanded Custody Rule was equally controversial. It proposed broadening the definition of “custody” to include nearly all digital assets. Financial advisers would have been forced to hold crypto with only certain “qualified custodians”—a move that could have led to mass restructuring or forced exits from the US market.

Now, both rules—and several other Gensler-era proposals—are officially off the table. The SEC also reversed planned rules around cybersecurity, ESG reporting, and security-based swaps.

Crypto America podcast host Eleanor Terrett summed it up:
“The SEC just officially scrapped the expanded Custody Rule proposal and Rule 3b-16, plus other Gensler-era rules.”

🚨NEW: The SEC just officially scrapped the expanded Custody Rule proposal and Rule 3b-16, plus other Gensler-era rules.

The Custody Rule aimed to cover all client assets including crypto, broadened what counts as “custody,” and raised concerns about whether certain state… https://t.co/MSn1EbhEWN

— Eleanor Terrett (@EleanorTerrett) June 13, 2025

For many in the space, this signals an end to what was seen as an overreaching, innovation-chilling regulatory approach.

The shift also comes at a time when market sentiment is picking up. For instance, recent hourly Bitcoin bets indicate renewed trader confidence in short-term gains as regulatory clarity improves.

US Reopens to Crypto Innovation Under New SEC Leadership

This dramatic rollback aligns closely with the Trump administration’s new market-friendly stance. Paul Atkins, the SEC’s newly appointed Chair, said the prior approach discouraged American participation in blockchain-based systems through enforcement, lawsuits, and regulatory threats.

Atkins now leads an SEC focused more on clear rules and less on regulatory battles. Commissioners Mark Uyeda and Hester Peirce—now head of the SEC’s newly formed Crypto Task Force—have long pushed for more constructive engagement with the crypto sector.

🚨NEW: The SEC just officially scrapped the expanded Custody Rule proposal and Rule 3b-16, plus other Gensler-era rules.

The Custody Rule aimed to cover all client assets including crypto, broadened what counts as “custody,” and raised concerns about whether certain state… https://t.co/MSn1EbhEWN

— Eleanor Terrett (@EleanorTerrett) June 13, 2025

This change comes at a pivotal moment. Many in Washington believe the CLARITY Act, a new law providing clearer digital asset definitions, makes expansive SEC oversight unnecessary.

Meanwhile, blockchain ecosystems are showing fresh momentum. Rumors around a possible Solana ETF approval recently pushed SOL’s price up by 4.5%, a sign that investor appetite remains strong in this space.

For Coinbase CLO Paul Grewal, Thursday’s news is more than a simple policy win. It’s a sign that the US is once again welcoming blockchain innovation, rather than driving it offshore.

Grewal said the SEC’s decision was a “victory for blockchain innovation” and a strong rebuke of the regulatory overreach seen under Gensler. Crypto builders, many of whom had started considering more favorable regions like Europe or Asia, may now see new hope for developing their projects within the US.

Industry leaders argue that the previous administration’s stance created uncertainty and legal risks, discouraging investment and innovation. The SEC often acted without clear congressional backing, leaning on vague legal interpretations that left the market in limbo.

Now, with the new leadership’s pro-market tone and the CLARITY Act advancing, the regulatory landscape appears to be changing for the better.

Developers across various networks, from Ethereum’s Geth client community to newer ecosystems using AI-driven trading bots like Pump.fun, are likely to benefit from this friendlier regulatory environment.

For the first time in years, there’s renewed optimism that the US can be a global hub for crypto and blockchain development—without the looming threat of sweeping regulatory crackdowns.