Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT) filed a lawsuit against the Securities and Exchange Commission (SEC) in the Northern District of Texas that challenges the SEC’s misguided attacks on the U.S. digital asset industry and the Commission’s arbitrary and capricious rulemaking.
BA and CFAT seek a court order “to strike down the SEC’s Dealer Rule due to the SEC’s various Administrative Procedure Act (APA) violations that prevent industry participants from being able to operate under clearly communicated rules that have gone through a fair and transparent rulemaking process.”
The complaint alleges that the SEC violated the APA in unlawfully expanding the SEC’s interpretation of the statutory term “dealer,” enacted “as part of the Securities Exchange Act of 1934.”
As stated in the update, the SEC’s unlawful radical expansion “bears no resemblance to the long-standing and well-settled meaning of the term, and mandates an approach that will cause irreparable damage to the tens of millions of Americans and businesses who participate in digital asset trading.”
In expanding the term “dealer,” the SEC refused “to substantively engage with commenters’ serious questions concerning how the rule would apply to digital asset technology.”
The rule fails to adequately assess the costs and benefits of “such an approach, and applies a vague, much-broader, standard that pulls in participants who, in no way, resemble a ‘dealer’ as the term has been understood for decades.”
Blockchain Association CEO Kristin Smith said:
“This is the latest example of the SEC’s blatant attempts to unlawfully regulate outside its authority, skirting legal obligations to address the numerous concerns received during its compressed comment period. 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. Blockchain Association and the Crypto Freedom Alliance of Texas stand as staunch defenders of the American digital asset ecosystem. Before more harm can be done by this rabid regulator, we are seeking declaratory judgment and injunctive relief against the SEC to overturn their rule expansion and prohibit its use against our industry.”
Blockchain Association is the collective voice of “the cryptocurrency industry. Our members include the sector’s leading investors, companies, and projects, working together to support a future-forward, pro-innovation national policy and regulatory framework for the crypto economy.”
Crypto Freedom Alliance of Texas (CFAT) is “a nonprofit trade association that advocates for the responsible development of digital asset policies in Texas that will foster innovation and economic growth, while protecting consumers.”
They believe blockchain technology “paves the way for the next generation of the internet and that Texas has a lot to gain from being a leader in digital asset policy.”
CFAT counts as members several companies “at the forefront of digital asset innovation, including Coinbase, a16z Crypto, Ledger, Paradigm, and Blockchain Capital.”
