SEC Gag Rule Survives Supreme Court, Leaving Crypto Settlements Unprotected

Published by James Harris on June 29, 2026June 29, 2026

The Supreme Court declined to hear a First Amendment challenge to the SEC’s so-called Gag Rule, a 50-year-old policy requiring defendants to stay silent about alleged wrongdoing after settling enforcement cases. The dismissal is procedurally clean but constitutionally empty: the underlying question of whether agencies can compel that silence was never answered.

The SEC had already rescinded Rule 202.5(e) in May under Chairman Paul Atkins, rendering the Powell case technically moot in the agency’s view. That argument carried the day, at least enough to avoid a merits ruling. The NCLA, which brought the case on behalf of Thomas Powell, a defendant in a 2021 unregistered securities matter who paid a $75,000 penalty, pushed back with a straightforward point: a rule rescinded administratively can be reinstated the same way. Former Solicitor General Greg Garre made the same argument for taking the case, precisely because a formal precedent would have foreclosed future revivals. The CFTC, for its part, scrapped its own version of the rule in June and said it would not enforce existing no-deny clauses in prior settlements. Two agencies walked back the same type of provision in the same season, which tells you something about how legally exposed those provisions had become.

Without a Supreme Court ruling, there is no constitutional wall blocking a future administration from bringing the Gag Rule back.

That gap matters most to the dozens of crypto firms that settled SEC enforcement cases over the past several years under the old terms. The SEC has separately acknowledged what it described as flaws in its prior crypto enforcement posture, dismissing cases against Coinbase, Binance, and Kraken, among others. Whether any of those firms or their executives now choose to publicly contest the original allegations is an open question, but the legal risk of doing so just dropped considerably. The SEC’s recent posture, including its move to revisit foundational market structure rules in ways that could reshape how tokenized assets trade, reflects an agency in a different regulatory mode than the one that issued most of those settlements. Defendants who stayed silent for years under threat of contempt now have more room, practically if not yet constitutionally.

The NCLA’s argument that the government never provided binding assurance against re-enforcement remains accurate. A future SEC chair who wants the Gag Rule back faces no court precedent, only political friction.