The Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT) have filed a lawsuit against the United States Securities and Exchange Commission (SEC) in the Northern District of Texas. The lawsuit aims to challenge the SEC’s recent expansion of the “Dealer Rule,” which the industry groups argue is stifling innovation in the U.S. digital asset market.
According to a statement released on April 23, the BA announced the lawsuit as a means to challenge the SEC’s broad interpretation of the term “dealer” within the Securities Exchange Act of 1934. The SEC’s adoption of new rules in February redefined “dealer” and “government securities dealer,” resulting in more crypto market participants being required to register, join a self-regulatory organization, and comply with federal securities laws.
The lawsuit claims that this expansion has created a regulatory environment that is vague and burdensome for businesses involved in digital asset trading. It also alleges that the SEC failed to adequately address public concerns and neglected to assess the potential negative impacts of the rule during the limited comment period.
Kristin Smith, the CEO of the Blockchain Association, stated that this lawsuit is yet another example of the SEC’s unlawful attempts to regulate beyond its authority. The lawsuit seeks a court order to overturn the expansion of the Dealer Rule based on violations of the Administrative Procedure Act (APA), which ensures fair and transparent rulemaking by requiring agencies to consider public feedback and provide clear guidelines.
Smith added that they are seeking “declaratory judgment and injunctive relief” against the regulators to overturn the expansion of the rule and prevent further harm from being done by the SEC. The BA and CFAT represent a significant portion of the cryptocurrency industry, including leading investors, companies, and projects. Their overall work aims to advocate for a national policy framework that fosters local innovation and responsible development within the digital asset space in the United States.