The U.S. SEC has withdrawn its appeal to expand DeFi regulation, marking a significant moment for the crypto industry.
What Just Happened?
The SEC proposed an expanded 'dealer' definition requiring DeFi protocols and liquidity providers to register as securities exchanges. In November 2024, a Texas federal court overturned the rule. In February 2025, the SEC quietly withdrew the appeal, leaving the decision intact.
Why Did the SEC Back Down?
The court's ruling strongly limited the SEC's actions, indicating the agency overstepped. Changes in leadership may have also influenced a shift to a more collaborative approach. The agency faced pressure from the crypto industry and political circles.
What This Means for Crypto and DeFi?
The decision allows DeFi protocols and liquidity providers not to register as dealers for now. Regulatory uncertainty persists, but the approach may become more considered and constructive. Improved clarity may attract more institutional investors.
The SEC's withdrawal is a positive signal for the crypto industry, hinting at a potential shift toward more constructive regulation.
