The Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT) have initiated a lawsuit against the U.S. Securities and Exchange Commission (SEC), filed in the Northern District of Texas.
This legal challenge was announced by the BA on April 23 as a direct response to the SEC’s recent changes to the “Dealer Rule” in the Securities Exchange Act of 1934.
These industry groups argue that the SEC has exceeded its regulatory powers by broadly redefining the term “dealer.” In February, the SEC implemented new regulations that expanded the definitions of “dealer” and “government securities dealer.”
As a result, more participants in the cryptocurrency market are now required to register, affiliate with a self-regulatory organization, and adhere to federal securities laws.
The BA and CFAT contend that this broadened interpretation creates a nebulous and oppressive regulatory climate for those engaged in digital asset trading.
The lawsuit further asserts that the SEC neglected to properly address public concerns during a limited comment period and failed to evaluate the adverse effects these changes might have.
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Kristin Smith, CEO of the Blockchain Association, criticized the SEC’s actions, stating, “The Dealer Rule advances the SEC’s anti-digital asset crusade and unlawfully redefines the boundaries of its statutory authority granted to it by Congress, threatening to drive U.S. companies offshore and incite fear in American innovators.”
The lawsuit aims to revoke the Dealer Rule expansion, alleging it infringes on the Administrative Procedure Act (APA), which mandates transparent and equitable rulemaking processes, including the consideration of public input and the provision of clear regulations.
Smith emphasized their legal strategy, remarking, “We are seeking declaratory judgment and injunctive relief against the regulators to overturn the expansion of the rule and ultimately to prohibit its use against the industry before more harm can be done by this rabid regulator.”
Representing a substantial segment of the cryptocurrency sector, the BA and CFAT advocate for a national policy in the U.S. that promotes local innovation and responsible development in the digital asset field.
This lawsuit underscores their commitment to defending the interests of the cryptocurrency community against what they perceive as overreach by the SEC.
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