Lawsuit Filed Against SEC over ‘Dealer Rule’ by Blockchain Association and Crypto Activist Group

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. Their aim is to challenge the SEC’s recent expansion of the “Dealer Rule,” which they argue is hindering innovation in the US digital asset market. The BA and CFAT claim that the SEC has exceeded its authority by broadly interpreting the term “dealer” in the Securities Exchange Act of 1934. The SEC’s new rules, adopted in February, redefine “dealer” and “government securities dealer,” requiring more participants in the crypto market to register and comply with securities laws. The lawsuit alleges that this expansion creates a burdensome regulatory environment that lacks clarity for businesses involved in digital asset trading. According to Kristin Smith, the CEO of the Blockchain Association, the SEC’s actions are unlawful attempts to regulate beyond its authority. The lawsuit seeks to overturn the Dealer Rule expansion based on violations of the Administrative Procedure Act (APA), which promotes fair and transparent rulemaking. The BA and CFAT are looking for a court order to prohibit the use of this rule against the industry. They represent a significant portion of the cryptocurrency industry, advocating for a national policy framework that supports innovation and responsible development in the digital asset space within the United States.