- Crypto industry celebrates legal victory, with Blockchain Association calling it a significant win for market participants.
- Ruling criticizes SEC’s overreach in defining “dealer,” affecting liquidity providers with capital over $50 million.
A Texas federal judge recently overturned the SEC’s proposed broker-dealer rule, marking a significant victory for the cryptocurrency industry.
The ruling, delivered by Judge Reed O’Connor, criticized the SEC for its expansive interpretation of the term “dealer,” which encompassed all liquidity providers and market makers with over $50 million in capital.
DEALER RULE STRUCK DOWN! SEC exceeded its statutory authority. HUGE win for the entire industry @BlockchainAssn and @CryptoFreedomTX !!! pic.twitter.com/Zv1Mhv1uwl
— Marisa Tashman Coppel (@MTCoppel) November 21, 2024
O’Connor contended that this broad definition was not aligned with the Exchange Act’s original text or intent.
This judicial decision has been celebrated across the crypto sector, with Marisa Tashman Coppel from the Blockchain Association highlighting it as a pivotal moment for the industry’s growth. The verdict reflects a growing judicial acknowledgment of the need for precise regulatory frameworks that accurately reflect the evolving digital assets market without stifling innovation.
The SEC’s updated rules in February 2024 mandated that entities with substantial capital involvement in market-making must register as dealers or securities dealers. This regulation was met with substantial criticism from various industry stakeholders who argued that the SEC was overreaching its regulatory authority.
They particularly criticized the imposition of Know Your Customer (KYC) protocols on decentralized platforms, which typically operate without a central authority.
Judge O’Connor’s ruling emphasized that the SEC’s definition and subsequent requirements were “untethered” from the foundational securities laws of the United States, suggesting an overextension of the agency’s mandate.
This sentiment was echoed by several industry participants who felt that the rules were not only unrealistic but also unnecessarily burdensome.
This case was brought to court by the Crypto Freedom Alliance and the Blockchain Association after the SEC’s formal revision of the dealer definitions. The ongoing legal battles and the impending resignation of SEC Chairman Gary Gensler, slated for January 2025, signal a period of significant uncertainty and transition for the regulator.
On January 20, 2025 I will be stepping down as @SECGov Chair.
A thread 🧵⬇️
— Gary Gensler (@GaryGensler) November 21, 2024
The outcome of this legal challenge is not just a setback for the SEC but also a clarion call for clearer and more reasonable regulatory approaches in the era of crypto finance.
As the sector anticipates potentially more accommodating policies under the incoming administration of President Donald Trump, the industry views this ruling as a harbinger of a more supportive regulatory environment for cryptocurrencies in the United States.
Bitcoin (BTC) is currently trading at $99,367 USD, with a daily gain of 0.93%, approaching the critical psychological milestone of $100,000 USD. Over the past week, Bitcoin has increased by 13.83%, and its monthly growth stands at a remarkable 47.47%, reflecting strong bullish sentiment.
Year-to-date, Bitcoin has surged by an impressive 135.15%, underscoring its role as a dominant force in the cryptocurrency market.
