SEC withdrew crypto custody and DeFi exchange proposals

The U.S. Securities and Exchange Commission issued a notice dated June 12, 2025 withdrawing 14 proposed regulatory actions, including two proposals with direct consequences for crypto custody and decentralized trading. The decision ended those rulemaking tracks rather than merely delaying them: the Commission said it did not intend to issue final rules from the proposals and would publish a new proposal if it later returned to any of the subjects.

The chronology matters. June 12 was the SEC issue date and the date on the signed notice. The withdrawals were scheduled to take effect on June 17, 2025, when the notice was published in the Federal Register. They did not repeal an adopted crypto rule, and they did not erase requirements already in force.

The two crypto-facing proposals

The first was the Safeguarding Advisory Client Assets proposal, file S7-04-23. Proposed on February 15, 2023, it would have replaced and broadened the investment-adviser custody rule so that its framework reached all client assets, expressly including crypto assets. Among other protections, advisers with custody generally would have needed to maintain client crypto with a qualified custodian possessing or controlling the assets, subject to the proposal’s conditions.

Withdrawal meant that particular expansion would not become final in its proposed form. It did not declare every crypto custodian qualified, authorize advisers to ignore the existing custody rule or settle how every token is treated under federal securities law. It also concerned registered investment advisers’ handling of client assets, not a general ban on individuals holding their own wallet keys.

The second was the proposed amendment to Exchange Act Rule 3b-16, file S7-02-22. The SEC’s 2023 supplemental release had said existing exchange rules applied to platforms trading crypto asset securities, including some systems described as DeFi, and analyzed systems that could fall within the proposed expanded exchange definition. Withdrawing the docket removed the pending route for broadening that definition through this proposal.

That distinction was material for developers and protocol operators because decentralized systems can lack the conventional intermediary around which exchange registration was designed. It was also narrower than a blanket exemption: the withdrawal did not say that no DeFi arrangement could meet the existing statutory or regulatory definition of an exchange.

A change in rulemaking direction

The other withdrawn items addressed shareholder proposals, predictive analytics, cybersecurity, ESG disclosures, adviser outsourcing, security-based swaps and equity-market structure. Grouping the crypto-facing items into a 14-proposal withdrawal showed that the action was part of a broad reset of unfinished SEC rulemaking, not a crypto-only order.

Even so, its direction was unmistakable in the digital-asset context. Three days earlier, on June 9, SEC Chair Paul Atkins told the agency’s DeFi roundtable that self-custody was a foundational value and said he favored greater flexibility where intermediation imposed unnecessary costs or blocked on-chain activity. The June 12 withdrawals converted part of that policy shift from rhetoric into a formal termination of pending dockets.

For institutions, the immediate significance was reduced regulatory overhang rather than newly granted permission. Advisers, custodians and trading-system designers no longer had to plan for final rules emerging from these exact proposals. But enforcement exposure, registration analysis, fiduciary duties, state law and the SEC’s existing rules remained fact-specific constraints.

What was knowable on June 12

As of June 12, 2025, the verified conclusion was limited: the Commission had formally chosen not to finalize these proposals and required any future action in the same areas to begin with a new proposal or another issuance consistent with applicable administrative procedure.

No market-price claim is necessary to establish the development’s importance, and this reconstruction does not attribute any token move to the notice. The durable consequence was institutional: two prominent paths for extending securities regulation into crypto custody and DeFi had been closed, while the rules that might replace them remained unwritten.