SEC Overreach and Unclear Rule
The Blockchain Association and Crypto Freedom Alliance have filed a lawsuit against the SEC over its new “dealer” rule. They argue that the rule is vague and overly broad, failing to provide clear guidance for crypto market participants.
Under the rule, developers of automated software and liquidity providers could be classified as “dealers,” leading to increased costs and regulations.
Violation of Administrative Procedure Act
The complaint alleges that the SEC violated the Administrative Procedure Act (APA) by implementing the rule without proper public notice and comment. The industry was not given enough time to address concerns and assess the rule’s impact.
Unlawful Expansion of Authority
The crypto firms argue that the SEC’s interpretation of the term “dealer” is an unlawful expansion of its authority. They contend that the rule departs from the established meaning of the term under the Securities Exchange Act of 1934.
Irreparable Harm
The lawsuit claims that the rule will cause irreparable harm to the millions of Americans and businesses involved in digital asset trading. It could stifle innovation and drive US companies offshore.
CEO Criticism
Blockchain Association CEO Kristin Smith criticized the SEC’s regulatory overreach and failure to address industry concerns. She stated that the rule threatens to harm the American digital asset ecosystem.
Legal Battle and Implications
The lawsuit seeks to overturn the rule expansion and prevent its application. The outcome of the legal battle will have significant implications for the crypto industry’s future and the balance between regulation and innovation in the United States.
