The Blockchain Association and the Texas-based Crypto Freedom Alliance (CFAT) are two notable organizations in the cryptocurrency sector who have recently filed a legal challenge against the US Securities and Exchange Commission (SEC). This action was taken in response to a new SEC rule broadening the scope of what constitutes a “dealer” in securities.
In a federal court in Texas, a grievance has been filed, asserting that the SEC overstepped its bounds and sanctioned a rule that is unreasonable and inconsiderate.
Crypto Industry Takes Legal Action Against SEC
In the court case, cryptocurrency companies contest that the proposed regulation is too ambiguous and overly encompassing, leaving unclear how it affects those involved in the crypto market.
Specifically, the SEC rule classifies creators of automated programs and market makers for specific trading systems as potential “dealers.” Consequently, this labeling brings about extra expenses and more stringent regulatory obligations.
An additional argument in the complaint is that the Securities and Exchange Commission (SEC) incorrectly applied the Dealer Rule, contradicting the requirements of the Administrative Procedure Act (APA). This means that industry players have been left without clear guidelines for their operations, as the rulemaking process was supposed to be fair and transparent.
In the lawsuit’s allegation, it is claimed that the SEC’s new definition of “dealer” under the Securities Exchange Act of 1934 goes beyond what is legally allowed and significantly deviates from the previously understood meaning.
The grievance underscores that the new rule could inflict permanent damage on the vast number of Americans and corporations dealing with digital assets trading. Furthermore, two cryptocurrency companies argue that the SEC disregarded their concerns during the public consultation period and neglected to evaluate the pros and cons of their proposed actions, in breach of the Administrative Procedure Act.
CEO Slams SEC’s Regulatory Overreach
The CEO of the Blockchain Association, Kristin Smith, expressed her disapproval towards the excessive regulation by the Securities and Exchange Commission (SEC) and their neglect of addressing the concerns raised by the industry during a tight deadline for comments.
The Dealer Rule represents the SEC’s aggressive stance against digital assets and potentially oversteps the legal limits of its power bestowed by Congress. This rule may push American businesses towards overseas markets and instill apprehension among domestic innovators.
Smith highlighted the dedication of the Blockchain Association and Crypto Freedom Alliance of Texas towards safeguarding the American digital asset sector.
In the end, the goal of the lawsuit is to obtain a court declaration that the SEC’s rule expansion is invalid, and to secure an order preventing this rule from being enforced in our industry.
The dispute between crypto organizations and the Securities and Exchange Commission (SEC) underscores the continuous effort to create a definitive legal structure for the rapidly developing digital asset sector.
As the situation develops, the results may hold major consequences for the industry’s future in the US, affecting the delicate equilibrium between regulatory control and advancement.
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2024-04-24 05:11