The U.S. Securities and Exchange Commission has withdrawn a slate of rule proposals introduced during Chair Gary Gensler’s tenure, issuing final notices late Thursday. The decision scraps the expanded Custody Rule, Rule 3b-16 aimed at bringing decentralized-finance (DeFi) platforms under securities regulations, and enhanced environmental, social and governance (ESG) disclosure requirements for public companies. The expanded Custody Rule would have obliged registered investment advisers to hold all client assets—including cryptocurrencies—with “qualified custodians,” a standard most digital-asset firms were unlikely to meet. Industry participants warned the measure could force advisers to exit the crypto market or undertake costly restructuring. Rule 3b-16 sought to broaden the definition of an exchange under the Securities Exchange Act to include DeFi trading venues that rely on automated smart contracts. Critics argued the proposal was overly expansive and could extend registration obligations to software developers and liquidity providers. The agency’s notice states that dozens of proposals issued between March 2022 and November 2023 will not be finalized. The SEC did not specify whether it will pursue alternative rules, leaving crypto firms and public companies to operate under the existing regulatory framework for the foreseeable future.