The Blockchain Association (BA) and the Cryptocurrency Freedom Alliance of Texas (CFAT) have jointly filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) in the Northern District of Texas, according to a recent statement. The lawsuit aims to challenge the SEC's expanded "dealer rules," which industry groups argue hinder innovation within the U.S. digital asset market.
Announced by BA on April 23, the lawsuit contends that the SEC overstepped its authority by broadly interpreting the term "dealer" as outlined in the Securities Exchange Act of 1934. In February, the SEC introduced new rules that redefined both "dealers" and "dealers in government securities," effectively mandating additional cryptocurrency market participants to register, join self-regulatory organizations, and adhere to federal securities laws.
BA and CFAT assert that this expanded regulatory scope has introduced ambiguity and excessive burdens for companies involved in digital asset trading. The lawsuit further alleges that the SEC failed to adequately address public concerns during a limited comment period and neglected to assess the potential adverse impacts of the rule.
Christine Smith, CEO of the Blockchain Association, characterized the SEC's actions as a blatant attempt to overreach its regulatory authority. She criticized the Dealers Rule as part of the SEC's broader anti-digital asset agenda, claiming it unlawfully redefines statutory boundaries set by Congress and risks driving U.S. companies overseas while stifling innovation domestically.
In pursuit of resolution, the lawsuit seeks a court order to overturn the expansion of the dealer rule, citing violations of the Administrative Procedure Act (APA). The APA mandates fair and transparent rulemaking, requiring agencies to consider public feedback and provide clear guidelines. Smith emphasized that the goal is to obtain declaratory judgment and injunctive relief against the SEC to prevent further harm to the industry.
BA and CFAT, representing a substantial segment of the cryptocurrency industry, advocate for a national policy framework in the United States that fosters local innovation and responsible development in the digital asset sector. Their collaborative efforts aim to safeguard the interests of investors, companies, and projects within the evolving landscape of digital finance.
