Today, the Blockchain Association and the Crypto Freedom Alliance of Texas launched a legal challenge against the SEC, contesting the agency’s expanded definition of “dealer” within the cryptocurrency sector. Filed in the Northern District of Texas, the lawsuit argues that this redefinition could significantly impair the U.S. crypto industry, asserting that the SEC overstepped its regulatory bounds.
The complaint highlights that the SEC’s modified dealer definition under the Securities Exchange Act of 1934 extends beyond its jurisdiction and deviates from normal regulatory procedures. The plaintiffs claim the rule change is ambiguous, overly broad, and could potentially ensnare individuals and businesses not typically classified as dealers, thus disrupting the operations and economic stability of numerous U.S. entities involved in crypto.
The Blockchain Association and the Crypto Freedom Alliance of Texas criticize the SEC for inadequate stakeholder engagement and failing to properly assess the economic impacts of the rule. They are seeking a court order to repeal the Dealer Rule, alleging that its establishment was fraught with violations of the Administrative Procedure Act due to a lack of transparency and disregard for a fair rulemaking process.
Kristin Smith, CEO of the Blockchain Association, expressed deep frustration over what she describes as the SEC’s attempts to regulate the crypto industry without proper authority, risking the potential exodus of U.S. companies to more crypto-friendly nations and stifling innovation domestically.
This legal action not only challenges the SEC’s recent rule but also aims to protect the burgeoning U.S. crypto sector from what the plaintiffs see as an overzealous regulatory approach. The outcome of this lawsuit could have significant implications for regulatory practices and the future of cryptocurrency operations in the United States.