Blockchain Association and Crypto Freedom Alliance of Texas Sue SEC Over 'Dealer Rule' Expansion
Summary:
The Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT) have filed a joint lawsuit against the U.S. Securities and Exchange Commission (SEC), challenging the recent expansion of the "Dealer Rule". The groups argue this change, which requires more crypto participants to register, stifles innovation in the U.S. digital asset industry, creates burdensome regulations, and oversteps the SEC's authority. The lawsuit seeks a court order to overturn the expansion, alleging violations of the Administrative Procedure Act (APA).
The Blockchain Association (BA) along with the Crypto Freedom Alliance of Texas (CFAT) have unveiled a joint lawsuit against the U.S. Securities and Exchange Commission (SEC). The action, lodged in the Northern District of Texas, challenges the SEC's recent broadening of the "Dealer Rule," a decision both industry groups argue stifles U.S. digital asset market innovation, as per an April 23 announcement. The groups are asserting that the SEC has overstepped its bounds by broadening the definition of "dealer" in the context of the Securities Exchange Act of 1934. In February, new SEC rules were introduced, altering the interpretation of "dealer and "government securities dealer", which in effect necessitates more participants in the crypto market to register, join a regulatory body, and adhere to federal securities legislation. According to the lawsuit, this regulatory expansion creates a nebulous and onerous climate for businesses engaged in digital asset trade. The groups further allege that the SEC failed to properly address public concerns raised during a brief comment period, and didn’t assess potentially harmful effects of the rule. CEO of the Blockchain Association, Kristin Smith, referred to this as another instance of the SEC’s “unwarranted attempts to regulate outside of its jurisdiction.” “Through the Dealer Rule, the SEC is continuing to unfairly target the digital asset industry and is unlawfully moving beyond the boundaries of its statutory authority as given by Congress, posing a threat to drive U.S. companies out of the country and creating scare among American innovators”, says Smith. The lawsuit’s focus is getting a judicial order to repeal the expanded Dealer Rule on the grounds of violations of the Administrative Procedure Act (APA). The APA demands fair and transparent rule-making process, enforcing the need for agencies to consider public feedback and provide detailed guidelines. Smith added that they are seeking an “injunctive relief and a declaratory judgment” against the regulators with the aim of overturning the rule's expansion and stopping it from potentially hurting the industry. Both the BA and CFAT cater to a sizable portion of the cryptocurrency industry, featuring leading investors, companies, and projects. Their collective aim is to promote a national policy framework in the U.S. that encourages local innovation and responsible growth within the digital asset sphere.
Published At
4/23/2024 5:07:46 PM
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