In a bold move, the Blockchain Association and the Crypto Freedom Alliance of Texas have decided to take legal action against the US Securities and Exchange Commission (SEC). Their argument revolves around the recent sanctioning of a rule by the SEC that redefines the parameters for what constitutes a “dealer” of securities. According to the groups, this action by the SEC was deemed as “arbitrary and capricious” and a violation of the Administrative Procedure Act (APA).
Blockchain Association CEO Kristin Smith did not hold back in her criticism of the SEC, stating that the rule was just another attempt by the SEC to unlawfully regulate beyond its authority. She believes that the Dealer Rule is part of the SEC’s ongoing crusade against digital assets and unjustly expands the boundaries of its statutory authority granted by Congress. This move could potentially drive US companies offshore and instill fear in American innovators.
DeFi Impact
Marissa Tashman Coppel, the legal lead at the Blockchain Association, highlighted the detrimental effects of the SEC’s rule on the digital asset ecosystem, particularly on DeFi. She pointed out that the lack of clarity in the rule could have severe implications for liquidity providers, DeFi software, and developers. The introduction of new tests to identify dealers, which focus on trading activity rather than customer relationships, marks a significant departure from previous SEC interpretations.
Coppel also criticized the SEC for failing to address key issues raised by industry stakeholders during the comment period. One major issue is the lack of clarity on which crypto asset transactions qualify as securities transactions. This ambiguity makes it challenging for industry players to determine compliance requirements, further adding to the confusion and uncertainty in the market.
Industry Support
The Blockchain Association boasts an impressive member base that includes major crypto companies like Coinbase, Kraken, Circle, and Ripple. These companies, along with others in the industry, are standing behind the association in its legal battle against the SEC. The outcome of this legal action could have far-reaching implications for the future of crypto regulation in the United States.
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