SEC removes a series of crypto regulations during Biden's term.

The Securities and Exchange Commission of the United States (SEC) has revoked a series of crypto regulations proposed by the agency during the Biden Administration, including two regulations related to custody (custody) and exchange.

On Thursday, the SEC said it was "retracting some of the draft regulatory notices" issued between March 2022 and November 2023 under former Chairman Gary Gensler.

The agency also added that they "have no intention of issuing final regulations regarding these proposals" and that if their views change in future regulatory actions, new regulations will be proposed.

This is part of President Donald Trump's latest efforts to roll back regulations, with a promise to implement large-scale loosening for both traditional markets and the crypto market.

"It's all gone wrong 3b16, the regulations for qualified custodians and all the unfinished draft regulations from Gensler" wrote Coinbase's Chief Legal Officer Paul Grewal on X.

The regulation defining "exchange" is nullified

Among the 14 regulations withdrawn by the SEC, there is Rule 3b-16 – a proposal to expand the definition of "exchange" to include DeFi protocols and tighten the crypto custody standards for investment advisers.

This amendment redefines some terms used in the definition of "exchange" to include "systems that provide non-fixed trading orders and communication protocols that help connect buyers and sellers of securities."

Such a broad definition may cause many DeFi protocols to be classified as securities exchanges.

The SEC first announced the draft amendment to Rule 3b-16 under the (Exchange Act) in March 2022.

Mark Uyeda, the then-acting Chair of the SEC, proposed to cancel the regulatory changes aimed at expanding the definition of "alternative trading system" to include crypto companies in March.

Crypto custody regulations have been canceled

The SEC has also revoked a proposed rule from March 2023 that increased custody requirements for crypto.

The regulation "Protecting Client Assets of Investment Advisers" proposed by the SEC will expand the existing Custody Rules under the Investment Advisers Act of 1940. Although designed to apply broadly to all client assets, this regulation is particularly significant for crypto as it aims to more clearly bring digital assets within the scope of the SEC's custody requirements.

Investment firms will be required to hold all customer assets, including cryptocurrencies, at a "qualified custodian," typically banks or regulated brokerage firms.

Most exchanges and crypto wallet providers do not meet the definition of "qualified custodian," which could force investment advisers to change providers or exit the field. In March, Uyeda asked staff to consider the possibility of withdrawing the proposed regulation on crypto custody.

Other regulations revoked

In addition, the agency also withdrew several other regulations such as the management and reporting rules for cybersecurity risks intended for investment advisors and funds, which affect crypto fund managers and digital asset custodians.

A regulation on position reporting for large security-based swap contracts ( may affect entities involved with crypto derivative products ) that has also been retracted.

The regulatory agency has also withdrawn the proposal requiring public companies to comply with ESG reporting standards ( environment, social, and governance ) enhancement.

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