The US Securities and Exchange Commission has rescinded a long-standing rule that barred settling parties in enforcement actions from denying the agency's allegations. The SEC announced the rescission on Monday, eliminating a policy adopted in 1972. According to SEC Chair Paul Atkins, the rule had given the impression that the agency was "trying to shield itself from criticism," and rescinding it aligned the SEC with "the overwhelming majority of federal agencies that do not have a similar rule." The move grants the SEC "more flexibility in settling enforcement actions," particularly affecting crypto companies that have criticized the rule as a restriction on free speech.
## SEC Leadership and Policy Rationale
"For more than 50 years, the Commission has conditioned settlement on a defendant's promise not to publicly deny the Commission's allegations. I am pleased that we are rescinding the no-deny policy today," SEC Chair Paul Atkins said. "This rescission ends the policy prohibiting such criticism by settling defendants."
According to the rule's original text, the SEC created it because it did not want to give the impression that it was imposing sanctions when alleged conduct did not occur. The agency believed that refusing to admit its allegations was equivalent to a denial, unless a settling party stated that they neither admitted nor denied the allegations.
Paul Atkins, pictured speaking at Bitcoin 2026 last month, said he supported scrapping the SEC's gag rule. Source: YouTube
SEC Commissioner Hester Peirce supported the rescission, stating that "settlements shrouded in forced silence by the non-governmental party do not serve either the markets or the Commission's investor-protection mission." Peirce had previously criticized the rule in early 2024, saying it "undermines regulatory integrity."
## Implementation and Enforcement
The SEC informed the White House earlier this month that it planned to scrap the rule, submitting a rescission plan to the Office of Management and Budget.
Under the new policy, the SEC said it will not enforce existing no-deny provisions. However, the agency may continue to require some defendants to admit to facts or liability when settling enforcement actions.
## Impact on Crypto Settlements
Under the Trump administration, the SEC has settled or abandoned multiple high-profile crypto enforcement cases initiated under the Biden administration. Its most notable settlement was the $50 million agreement with Ripple Labs in May 2025.
Dozens of crypto companies have settled lawsuits with the SEC in recent years and have criticized the gag rule as a restriction on their right to free speech.
The SEC's crypto-related enforcement actions reached a 10-year high in 2023, with 46 actions against crypto firms and $281 million in penalties collected from settlements.
