The United States Securities and Exchange Commission (SEC) has officially rescinded its long-standing “gag rule,” a controversial policy that prevented defendants in enforcement actions from publicly denying the agency’s allegations after settling. This landmark decision marks the end of a 1972 mandate that many critics, particularly within the cryptocurrency industry, argued was a severe restriction on free speech.
Under the leadership of SEC Chair Paul Atkins, the agency is taking a significant step toward transparency. The SEC acknowledged that the decades-old rule created the damaging impression that the regulatory body was attempting to shield itself from public criticism. By scrapping this policy, the SEC is finally aligning its enforcement practices with the overwhelming majority of other federal agencies that operate without such restrictive silencing mechanisms.
Why the SEC Chose to End Its Historic “No-Deny” Policy
The original no-deny policy was implemented over fifty years ago to prevent situations where the SEC might appear to be imposing sanctions for misconduct that allegedly never happened. The agency historically believed that allowing a defendant to settle while simultaneously refusing to admit to the allegations was effectively a public denial. To navigate this, defendants were forced into a legal corner where they had to state they neither admitted nor denied the claims, while promising never to contradict the SEC’s narrative publicly.
SEC Chair Paul Atkins expressed strong support for the policy reversal, emphasizing that conditioning a settlement on a promise of silence is no longer appropriate. Atkins, who recently spoke at the Bitcoin 2026 conference, highlighted that this rescission completely ends the prohibition on criticism by settling defendants. Prior to the official announcement, the SEC formally informed the White House of its intentions, submitting the rescission plan to the Office of Management and Budget.
Going forward, the SEC confirmed it will no longer enforce existing no-deny provisions from past settlements, providing immediate relief to previously silenced companies. However, the agency noted that it retains the flexibility to require certain defendants to explicitly admit to facts or liability during the settlement process, ensuring accountability is maintained when absolutely necessary.
A New Era for Crypto Settlements and Regulatory Transparency
The removal of the gag rule is a particularly massive victory for the cryptocurrency sector. Over the past few years, dozens of crypto firms have been forced into settlements with the SEC, with many heavily criticizing the enforced silence as an unconstitutional muzzle. This shift highlights a sharp pivot in regulatory approach under the Trump administration compared to the aggressive enforcement actions seen during the Biden administration.
Under former SEC Chair Gary Gensler, crypto-related enforcement reached a ten-year peak in 2023, resulting in forty-six separate actions against digital asset firms and the collection of $281 million in penalties. Since the change in administration, the SEC has either abandoned or settled several of those high-profile cases. One of the most notable resolutions was the $50 million settlement with Ripple Labs in May 2025, signaling a much more flexible and pragmatic approach to resolving complex industry disputes.
SEC Commissioner Hester Peirce has been a vocal advocate for this change, having criticized the gag rule as early as 2024 for undermining regulatory integrity. Peirce championed the rescission, stating that settlements shrouded in forced silence by private parties serve neither the financial markets nor the SEC’s core mission of protecting investors. With the gag rule finally abolished, both traditional financial institutions and modern digital asset companies can negotiate settlements without sacrificing their right to defend their public reputations.
