The Blockchain Association and the Crypto Freedom Alliance of Texas have initiated a lawsuit against the U.S. Securities and Exchange Commission.
Two opposing sides argue that a recent rule set by the SEC, effective from February, may harm the crypto sector. This new regulation applies federal securities legislation to market players with substantial functions in facilitating trades, including crypto exchanges.
On Monday, a complaint was lodged in a Texas court alleging federal rulemaking infringements based on the Administrative Procedures Act (APA).
“Kristin Smith, CEO of Blockchain Association, is asking for a court decision (declaratory judgment) and an order to stop the SEC from implementing their new rule expansion and using it against our industry, as we believe this regulatory action may cause further damage.”
Crypto assets classified as securities or government securities are subject to the rule, with a few exemptions. Exemptions include crypto assets valued below $50 million, such as decentralized finance (defi) assets.
The new SEC rule received significant backlash from crypto industry groups.
Currently, BA and CFAT have initiated a legal action against the SEC, seeking the court’s intervention to invalidate the ambiguous and arbitrarily enforced expansion of the Dealer Rule. This rule poses a significant obstacle to innovation within the digital asset sector, causes harm, and empowers the SEC to govern through unpublished guidelines rather than clear regulations.
— Blockchain Association (@BlockchainAssn) April 23, 2024
The Commission’s unexplained decision not to grant an exemption to the digital asset sector and failed to clarify the applicability of the rule to these emerging markets was criticized in the complaint submitted by the Blockchain Association and the Crypto Freedom Alliance of Texas.
The SEC defended its decisions by explaining that it follows the laws requiring rulemaking and proper administrative processes, and is prepared to strongly argue for the final dealer rules in any legal proceedings.
An ongoing legal battle against the SEC now includes this new lawsuit, which is part of a growing number over the past year. In February, the Crypto Freedom Alliance of Texas and the digital asset company LEJILEX filed lawsuits jointly, accusing the SEC of unfairly targeting the crypto industry with unlawful practices.
Furthermore, the DeFi Education Fund and fashion brand Beba filed a lawsuit against the SEC in the past month, alleging violations of the Administrative Procedure Act. In the previous year, cryptocurrency exchange Coinbase initiated legal action against the SEC, seeking clarification on its petition for regulatory guidance.
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2024-04-23 18:38