SEC’s Regulatory Overreach Challenged in Court: Motion Filed to Strike Down ‘Dealer’ Rule
The Crypto Freedom Alliance of Texas and Blockchain Association have taken legal action by filing a motion on May 17th to invalidate the U.S. Securities and Exchange Commission (SEC)’s recently established Dealer Rule. Coinciding with the digital asset industry, the plaintiffs’ legal representatives argue that the SEC has surpassed its legal authority under the Securities Exchange Act with the expanded definition of “dealer.” They claim that the SEC failed to address crucial industry concerns, lacked specific economic analysis relating to digital assets, and deviated from established interpretations without adequate explanation. As a result, the plaintiffs consider the rulemaking process to be arbitrary, capricious, and a contravention of the Administrative Procedure Act (APA).
The SEC’s new rule aims to impose registration requirements on participants in the digital asset market. However, the plaintiffs highlight that this could impede innovation and impose unsuitable regulations on the industry. They emphasize that the SEC did not offer clear guidance on how digital asset participants can comply with the new rule and failed to conduct a proper analysis of its economic impact on these markets. Consequently, they are seeking to have the Dealer Rule invalidated in order to safeguard the growth and functionality of the digital asset industry.