Blockchain Association Sues SEC
Hey.
Well, I want to talk about the lawsuit
that Blockchain Association filed today
against the SEC, essentially challenging
the SEC’s view of who and what is a
dealer.
What’s the issue that you see?
Yeah, so the SEC finalized a new
regulation called the dealer rule
earlier this year.
And the problem is the SEC went forward
and basically tried to do a very
expansive redefining of what it means to
be a dealer.
So this is problematic for traders who
are trading on their own account that
might get pulled into this regulation.
But in the crypto world, it’s
particularly problematic for
decentralized finance.
You know, decentralized finance, we’re
trying to replace intermediaries with
software code where there is no customer
and client relationship.
A person could just go SCO simply
interact and make a transaction on their
own behalf.
And so with the dealer rule, it is so
vague.
And the SEC made no attempt to answer
the questions that the crypto industry
had in the comment making process that
we think that this violates the
Administrative Procedure Act.
You know, the SEC has laws that they
have to comply to with as well, and I
think the AP is one of them.
And so we’re hoping that the court will
find that their action was arbitrary and
capricious and will, you know, sort of
pull back that rules that the SEC pushed
forward in a very unclear and vague
manner.
Maybe paint a picture here of what
happens if the SEC is able to succeed
here with this rule.
Well, I mean, in some ways they have
succeeded, right?
I mean, they have finalized the rule.
And I think the problem that we have
right now is that market participants in
the crypto space don’t know how to
comply and in many cases can’t even
comply.
And so we’re seeing this.
When I talked to, you know, we have
nearly 100 companies within our
association at the Blockchain
Association.
We’re talking to members.
They’re holding off on hiring in the US
right now, or they have new products
that they want to launch on top of
blockchains, and they’re waiting to see
what happens with the election, what
happens with the SEC, because the
uncertain environment is problematic for
innovation.
And so, you know, our hope is that, you
know, our lawsuit there’s also another
one out there that the Managed Funds
Association has led on behalf of the
hedge funds.
You know, we’re hoping that these
lawsuits will slow the SEC down from
being able to move forward with
enforcing this rule, and we’ll force
them to go back to the drawing board and
reconsider some of the unique elements
that crypto technology has in the
trading space.
Blockchain Association sues the SEC challenging dealer terms. CEO Kristin Smith explains the reasons behind this in an interview with Sonali Basak and Tim Stenovec on “Bloomberg Crypto.”
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