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SEC Kills Proposed Crypto Custody And DeFi Rules
Crypto Trends

SEC Kills Proposed Crypto Custody And DeFi Rules

by admin June 13, 2025



The US Securities and Exchange Commission has rescinded a slate of rules the agency proposed under the Biden Administration, including two relating to crypto custody and exchanges.

The SEC said on Thursday that it was “withdrawing certain notices of proposed rulemaking” that were issued between March 2022 and November 2023 under former Chair Gary Gensler.

The agency added that it “does not intend to issue final rules with respect to these proposals,” and new rules will be proposed should it change its stance in future regulatory action. 

It’s President Donald Trump’s latest regulatory rollback, which has promised sweeping deregulation of crypto and traditional markets.

“Down goes 3b16, qualified custodian, and all the other unfinished Gensler rule proposals,” Coinbase chief legal officer Paul Grewal posted to X.

Source: Paul Grewal

Exchange definition rule nullified 

Among the 14 rules withdrawn by the SEC was Rule 3b-16, which would have expanded the definition of “exchange” to include decentralized finance protocols and tightened crypto custody standards for investment advisers.

The amendment defined certain terms used in the definition of “exchange” to include “systems that offer the use of non-firm trading interest and communication protocols to bring together buyers and sellers of securities.” 

The broad statement could have seen many decentralized finance (DeFi) protocols categorized as securities exchanges.

The SEC first published proposed amendments to Rule 3b-16 under the Exchange Act in March 2022.

Then-acting SEC chair Mark Uyeda proposed abandoning the rule change to expand the definition of “alternative trading systems” to include crypto firms in March. 

Crypto custody rule rescinded

The SEC also killed a rule proposed in March 2023 that would have upped custody requirements for crypto.

The SEC’s proposed Safeguarding Advisory Client Assets rule would have expanded existing Custody Rules under the Investment Advisers Act of 1940. It was broadly framed to apply to all client assets, but was particularly significant for crypto as it aimed to bring digital assets more explicitly under SEC custody requirements.

Investment firms would be required to hold all client assets, including crypto, with a “qualified custodian,” which typically meant regulated banks or broker-dealers.

Most crypto exchanges and wallet providers did not meet the definition of “qualified custodians,” which could have forced advisers to change providers or exit the space.

Related: CFTC’s Pham says it won’t give ‘easy street’ to anybody, crypto included

In March, Uyeda asked his staff to look at possibly withdrawing the proposed crypto custody rule. 

🚨 LATEST: The SEC officially withdraws multiple regulatory proposals including the expanded Custody Rule, Rule 3b-16 for DeFi exchanges, and enhanced ESG reporting requirements from the Gensler era. pic.twitter.com/V0jO3FKk8h

— Cointelegraph (@Cointelegraph) June 13, 2025

Other rules rescinded  

Other rules withdrawn by the regulator included cybersecurity risk management and reporting rules for investment advisers and funds, which had implications for crypto fund managers and digital asset custodians.

A rule for position reporting for large security-based swaps, potentially affecting entities with large crypto derivatives exposures, was also withdrawn.

The regulator also revoked its proposal to make public companies comply with enhanced ESG (environmental, social, and governance) reporting requirements.

Magazine: Elon Musk Dogecoin pump incoming? SOL tipped to hit $300 in 2025: Trade Secrets





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June 13, 2025 0 comments
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GameFi Guides

SEC Raises Legal Questions Over Proposed Ethereum, Solana ETFs

by admin June 2, 2025



In brief

  • The SEC raised concerns about whether the REX-Osprey ETH and SOL ETFs qualify under the Investment Company Act of 1940.
  • Despite ongoing discussions, the ETFs’ registration became effective on May 30 without resolving the issues.
  • The letter came a day after SEC staff issued guidance exempting certain staking practices from securities rules.

The U.S. Securities and Exchange Commission on Friday warned that two proposed exchange-traded funds tied to Ethereum and Solana may not meet the legal definition of an investment company, raising concerns over their registration and potential eligibility for exchange listing.

In a letter to counsel for ETF Opportunities Trust, the SEC said staff had unresolved questions about whether the REX-Osprey ETH and SOL ETFs, which include staking components, are structured to primarily invest in securities as required under the Investment Company Act of 1940.

ETF Opportunities Trust is a Delaware-based open-end investment company that serves as a legal vehicle, or issuer, for launching multiple exchange-traded funds, including those managed by REX.



Sponsors REX Shares and Osprey Funds filed a registration statement for their proposed Ethereum and Solana ETFs on January 21.

The filing also included several other crypto-linked products, including the first proposed ETFs for the TRUMP meme coin, BONK, and Dogecoin, as well as additional funds tracking Bitcoin and XRP.

While the registration statement for the REX-Osprey Ethereum and Solana ETFs became effective on May 30, the funds have not launched and are not listed on any exchange.

“As we have communicated to you on several occasions, Commission staff continues to have unresolved questions whether the Funds, if structured and operated as proposed, would be able to meet the definition of ‘investment company’ under the Investment Company Act,” SEC staff wrote.

A fund qualifies as an investment company under U.S. law if it is primarily engaged in investing or trading securities, or if investment securities make up more than 40% of its total assets.

The agency also said the ETFs may have improperly filed under Form N-1A, which is reserved for funds that qualify as investment companies under federal law, and may also fall short of the conditions of Rule 6c-11, which allows ETFs to operate and list without seeking individual exemptive relief.

“To the extent that these concerns remain unresolved, the Commission staff will consider the appropriate next steps to ensure compliance with the federal securities laws,” SEC staff wrote.

The letter follows staff guidance issued Thursday clarifying that certain types of crypto staking, such as self-staking and custodial staking, do not involve the offer or sale of securities under federal law.

The guidance, which is not legally binding, marked a shift from earlier enforcement stances and drew a dissent from Commissioner Caroline Crenshaw, who said the move “continues to sow uncertainty around what the law is.”

The SEC did not immediately respond to a request for comment.

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June 2, 2025 0 comments
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How proposed CEO could dole out punishments in college sports
Esports

How proposed CEO could dole out punishments in college sports

by admin May 20, 2025


With a long-awaited ruling in the settlement of the House case expected this week, college sports are on the precipice of a major overhaul.

While Judge Claudia Ann Wilken still needs to issue a final approval on the long-awaited settlement, a decision is expected to arrive in the near future.

Changes will come quickly to the way college sports work if the settlement is formalized. Most prominent among them will be a change in how enforcement works, as the NCAA will no longer be in charge of traditional enforcement, and a CEO will soon be put in place with powers that never existed prior.

The CEO of college sports’ new enforcement organization — the College Sports Commission — will have the final say in doling out punishments and deciding when rules have been violated, according to sources, a level of singular power that never existed during the NCAA’s era of struggling to enforce its rules.

The CEO’s hire is expected to come quickly after the House settlement is finalized and has been spearheaded by the Power 4 commissioners from the SEC, Big Ten, Big 12 and ACC. Their pick to lead the new agency will quickly become one of the most powerful and influential people in college sports. The hiring of a new CEO of the College Sports Commission already is deep in the process, per ESPN sources. The conducting of the search process before the job can officially be created is indicative of how quickly the entire billion-dollar industry will have to transform before games are played again in August. Nothing can happen formally until the judge’s decision, but the process is well underway.

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The CEO of the commission will be one of the faces of this new era of college athletics. Sources have told ESPN to expect the person to come from outside college athletics and not to be a household name to college sports fans. The CEO is expected to make seven figures and, once the settlement is in place and the hiring process is complete, will have significant authority.

“All the institutions are going to have new membership agreements that we’re all agreeing to these new rules,” said an industry source familiar with the process. “The CEO is going to have responsibility to make sure everything is enforced and the governance model is sound. It’s a critically important role for the future of college sports and college football.”

The CEO is expected to report to a board, which is expected to include the power conference commissioners. The CEO will also be in charge of essentially running the systems that have been put in place — LBi Software and accounting firm Deloitte have been lined up to handle salary cap management and to manage the clearinghouse for name, image and likeness.

With the NCAA no longer involved with traditional enforcement, it will mark a distinct industry shift. (The NCAA will still deal with issues such as academics and eligibility.)

According to sources, a vision of what this leader’s role could look like, and the extent of the position’s powers, is illustrated in drafts of so-called association documents that all schools are expected to sign to formalize the new enforcement entity. Basically, the schools need to agree that they’ll follow the rules.

While sources caution the documents that have been circulated are still in draft stage, sources say the draft includes language that the CEO will make “final factual findings and determinations” on violations of rules. The CEO will also “impose such fines, penalties or other sanctions as appropriate,” in accordance with the rules.

The schools have to accept these rulings “as final,” with the exception being if a school or athlete wants to challenge the discipline. They’d be required, per sources, “to engage in the arbitration process,” which is expected to be the sole recourse.

Per sources, when cases do end up in arbitration, under the procedures that govern arbitration, subpoena power is a potential option via the discovery process — an authority that was not available during NCAA investigations.

As college sports have zigzagged to where they are thanks to the direction of myriad lawsuits and rulings, the association agreement could also include a clause where the schools “agree to waive any right to a jury trial with respect to all disputes arising out of or relating to this agreement.” That notion would still need to be accepted by all the schools, and it’s not expected to prevent lawsuits from entities outside of the schools.

It’s worth noting that the lawsuits that have brought major changes to NCAA rules in recent years have started with attorneys general or with athletes. Congress is expected to still be needed to help create a legal framework for the new system to function without being tripped up by the current patchwork of state laws.

Enforcement has long been a thorn for the NCAA, which is now offloading one of its most controversial and least effective departments. All schools agree with enforcement as an ideal, but the issues come once the enforcement is enacted on them or their athletes.

Few coaches this generation have seen NCAA enforcement as an effective threat to follow the rules.

“It all starts with enforcement, and I’ve said this for a long time, ‘Until we have an enforcement arm put into place, we’re always going to be working sideways,'” Ohio State coach Ryan Day told ESPN on the “College GameDay” podcast recently. “I feel like before we set a rule, before we do anything, we have to put a structure in place where we can enforce rules on and off the field.”

The new organization looks to have expedited timelines and a highly compensated CEO to be the face of the decisions. (The NCAA used a committee on infractions.)

The drumbeat leading to the settlement is indicative of the past generations of behavior, as schools have been rushing to spend outside of the expected cap, with frontloading so significant that the highest-paid basketball roster is expected to have compensation totaling close to $20 million and football rosters are expected to be in the $40 million range.

Will schools fall in line once rules are put into place? Will the threat of enforcement be enough to settle down the landscape? It’s difficult for coaches to imagine player salaries going backward for 2026.

The ultimate deterrent will be stiff and consistent penalties to deter rule-breaking behavior, which have been elusive historically because of lack of NCAA enforcement prowess and the lengthy process of enforcement.

Purdue AD Mike Bobinski told ESPN in March that the punishments need to “leave a mark,” and he mentioned the New Orleans Saints’ Bountygate sanctions as an example of the type of punishment that changed behavior. (Then-Saints coach Sean Payton was suspended for the entire 2012 season as part of the penalties.)

“We’ve screwed this thing up now to the point where we have to be willing to draw a line in the sand, and that will create some pain,” Bobinski said. “There’s no two ways about it, and we’ll find out who’s just going to insist on stepping over the line. But if they do, you got to deal with it forcefully and quickly.”

He added that the Big Ten has put a lot of thought and conversation into this, as he said the mindset has to be changed to where coaches and programs can’t consider breaking the rules “worth it.”

Bobinski added: “People are working hard on this thing. That doesn’t mean it’s going to be easy or it’s going to be accepted right out of the box, but I’d like to think we’ve got a chance at least to do it well.”

ESPN reporter Dan Murphy contributed.



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May 20, 2025 0 comments
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