The Blockchain Association and CFAT, based in Texas, have initiated a lawsuit against the SEC over a new rule concerning “dealers” in the digital asset sector. In simple terms, they’re contesting an expanded definition of “dealer” put forth by the SEC in this domain. The legal action was taken at the Northern District Court of Texas with the goal of reversing this wider interpretation.
SEC Accused of Overreach in Digital Asset Regulation
The plaintiffs are raising concerns that the new definition may incorrectly label digital asset traders as dealers based on the impact of their trading activities rather than the actual transaction type. They argue that this rule fails to distinguish between dealers and individual investors, who have historically been exempt from dealer classification. Furthermore, they allege that the SEC neglected important steps in the rulemaking process, such as soliciting public comments and conducting a required economic analysis.
The Blockchain Association has voiced their disagreement, pointing out that the proposed rule may affect all players in the digital asset sector, such as those involved in liquidity pools. They believe that this extensive reach demonstrates an excessive regulatory attempt by the SEC.
Blockchain Association Fights Warren’s Digital Asset Legislation
In February, the Securities and Exchange Commission (SEC) passed a new dealer definition with a vote of 3 to 2. This definition focuses on the function of securities trading activities rather than the type of securities being traded. The SEC justified this decision by arguing that excluding cryptocurrency from this definition might give crypto dealers an unfair edge over conventional financial institutions.
Some critics argue that the Securities and Exchange Commission’s (SEC) stance on digital assets is unpredictable. The commission has not provided a clear-cut definition of which digital asset transactions fall under the category of securities transactions. Consequently, there is a great deal of ambiguity in the industry regarding this matter. Critics further contend that the SEC employs an inconsistent approach when labeling digital assets as securities, fueling regulatory uncertainty.
Additionally, the Blockchain Association has expressed apprehensions over Senator Elizabeth Warren’s proposed bill. Known as the Digital Asset Anti-Money Laundering Act of 2023, this legislation has drawn criticism for its potential negative impact on U.S. competitiveness and economic stability. The association issues a warning that such legislation could result in the loss of thousands of American jobs and compel U.S. businesses to move overseas.
The lawsuit asks the court to find that the SEC’s rule is unreasonable, irrational, or in violation of the law. It aims to prohibit the SEC from implementing this rule, emphasizing the risk it poses to discouraging American innovation.
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2024-04-24 00:23