What is the SEC’s “gag rule”?

US Securities and Exchange Commission’s “gag rule” prevented defendants settling enforcement actions from publicly denying the agency’s allegations. The policy had been in place since 1972 and was widely criticised by some crypto firms and legal advocates as limiting free speech.

Why did the SEC remove the no-deny policy?

The SEC said the rule created the impression the agency was trying to shield itself from criticism. SEC Chair Paul Atkins said removing the policy aligns the regulator with most federal agencies that do not impose similar restrictions.

Why does this matter for crypto companies?

Many crypto firms settled SEC lawsuits in recent years while being unable to publicly deny the regulator’s allegations. Removing the rule gives companies more freedom to challenge or criticise SEC claims even after reaching settlements.

How could this change future SEC crypto settlements?

The SEC said scrapping the rule gives it more flexibility in negotiating enforcement settlements. Companies may now be more willing to settle if they can still publicly disagree with some allegations afterward.

How does this affect Ripple Labs and XRP?

The change comes after the SEC reached a $50 million settlement with Ripple Labs in May 2025 following years of litigation over XRP token sales. While the rule change does not alter Ripple’s settlement directly, it reflects the SEC’s softer enforcement approach under the current administration.

Why are crypto investors paying attention to this SEC decision?

Crypto investors closely watch SEC enforcement because lawsuits and settlements can heavily affect token prices, exchange listings and market sentiment. A less aggressive regulatory posture could improve confidence across parts of the crypto industry.

What did Hester Peirce say about the SEC gag rule?

SEC Commissioner Hester Peirce supported removing the policy, arguing that settlements involving “forced silence” do not help markets or investor protection. She had criticised the rule during the SEC’s major crypto enforcement push under former chair Gary Gensler.

Image for illustrative purposes only. Not a real photo.

SEC scraps decades-old enforcement gag rule

Q: Does this mean defendants can now fully avoid admitting wrongdoing?

Not necessarily. The SEC said some defendants may still be required to admit certain facts or liability depending on the case and settlement terms.

Written by Jon CuthbertPublished May. 19 2026Last Updated May. 19 2026

US Securities and Exchange Commission has rescinded a decades-old rule that barred defendants settling enforcement actions from publicly denying the agency’s allegations, ending a policy critics described as a restriction on free speech.

The SEC announced Monday that it had scrapped the so-called “gag rule,” originally adopted in 1972, arguing the policy created the impression the agency was attempting to shield itself from criticism and no longer aligned with broader federal regulatory practice.

“For more than 50 years, the Commission has conditioned settlement on a defendant’s promise not to publicly deny the Commission’s allegations,”

SEC Chair Paul Atkins said, adding:

“I am pleased that we are rescinding the no-deny policy today.”

The regulator said removing the rule would provide greater flexibility when negotiating enforcement settlements, as the SEC under the Trump administration has already settled or dropped multiple crypto-related cases initiated during former chair Gary Gensler’s tenure.

One of the most prominent crypto resolutions came in May 2025 when the SEC reached a $50 million settlement with Ripple Labs following years of litigation over XRP token sales.

The SEC added that it would no longer enforce existing no-deny provisions, although some defendants could still be required to admit certain facts or liability as part of future settlements.

SEC Commissioner Hester Peirce supported the change, 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,” after previously criticising the policy during the agency’s aggressive crypto enforcement campaign.