Crypto’s Chains Unlocked—Will DeFi Soar or Stumble?

June 13, 2025, Washington, D.C.— The U.S. Securities and Exchange Commission recently repealed over a dozen Biden-era rules, including two crypto-killers: Rule 3b-16, which aimed to label DeFi protocols as securities exchanges, and a custody rule that mandated investment firms to store digital assets with large banks.

Announced June 13, 2025, this rollback is a seismic win for an industry long suffocated by Gary Gensler’s regulatory hammer. Coinbase's Paul Grewal declared the end of "Gensler's unfinished proposals," indicating a positive step towards innovation.

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DeFi’s Moment to Shine

Decentralized finance, or peer-to-peer money magic on the blockchain, has successfully overcome a significant obstacle. Rule 3b-16, proposed in March 2022, could’ve slapped DeFi platforms with the same red tape as Wall Street exchanges, stifling their permissionless ethos.

Now, with the rule dead, DeFi’s coders and dreamers can build without fear of SEC handcuffs. Industry insiders anticipate a surge in new protocols, ranging from lending apps to synthetic assets, as developers scramble to fill the gap.

Custody Rules Vanish, Doors Open

The scrapped custody rule, floated in March 2023, would’ve mandated that investment advisers hold crypto with “qualified custodians”—code for regulated banks or broker-dealers. The rule did not include most crypto exchanges and wallets, which could lead to a significant exodus of advisers from the space.

The repeal of the rule maintains a diverse range of custody options, which could attract institutional players previously marginalized by regulatory uncertainty. Anticipate an increase in hedge funds and pensions exploring Bitcoin and Ethereum.

Did you know?
In 2009, Bitcoin’s first transaction bought two pizzas for 10,000 BTC—worth over $700 million today.

Risks Lurk in the Shadows

Freedom isn’t free. Looser rules could invite bad actors—think pump-and-dump schemes or shady DeFi projects. The SEC's withdrawal from cybersecurity and ESG reporting regulations also sparks concern, given that crypto fund managers are under less scrutiny. Industry leaders urge self-regulation to avoid a backlash that could summon tougher laws down the road.

America’s Crypto Comeback Begins

With President Trump’s deregulation push in full swing, the U.S. is angling to reclaim its crypto crown. Jurisdictions like Dubai and Singapore have wooed firms with lighter rules, but the SEC’s pivot could keep talent and capital stateside.

“This is America hitting reset,” said a blockchain CEO, eyes on a future where DeFi rivals traditional finance. Will cryptocurrency capitalize on this opportunity, or will it make mistakes?