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 stifles innovation in the U.S. digital asset market.
In February, the SEC adopted new rules redefining “dealer” and “government securities dealer,” requiring more crypto market participants to register, join a self-regulatory organization, and comply with federal securities laws. The BA and CFAT claim that this expansion creates a vague and burdensome regulatory environment for businesses involved in digital asset trading.
The lawsuit alleges that the SEC failed to adequately address public concerns raised during a limited comment period and neglected to assess the potential negative impacts of the rule. Kristin Smith, CEO of the Blockchain Association, criticized the SEC’s actions as blatant attempts to unlawfully regulate outside its authority.
The lawsuit seeks a court order to overturn the Dealer Rule expansion 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. The BA and CFAT aim to prohibit the use of the expanded rule against the industry before more harm is done.
The BA and CFAT’s lawsuit is an important effort by the cryptocurrency industry to push back against what they perceive as overreach by regulatory agencies like the SEC. Their work advocates for a national policy framework within the U.S. that fosters local innovation and responsible development in the digital asset space to curtail overreaching arbitrary scrutiny by SEC.
