Crypto Lobbyists Sue SEC Over ‘Dealer’ Definition

Crypto Lobbyists Sue SEC Over ‘Dealer’ Definition

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crypto lobbyist Sue second over dealer
definition the second adopted a broad
and dealer definition that might capture
crypto Traders the blockchain
association and crypto Freedom Alliance
of Texas alleged a US Securities and
Exchange Commission rule expanding the
definition of a dealer to capture
digital assets activity has gone too far
a loss of the blockchain association and
crypto Freedom Alliance of Texas alleged
the suit filed in the district court for
the Northern District of Texas on
Tuesday claims that the expanded
definition of a dealer would also
capture people who are just trading in
digital assets the suit alleges that the
second did not engage with the feedback
it received during the Rule’s public
comment period and did not conduct its
statutorily required economic analysis
the suit is asking the Court to declare
that the rule is arbitrary capricious or
otherwise contrary to law under the
administrative procedures act and to
block the second from enforcing the rule
because of the rules exclusive focus on
post Hawk effects of trading the new
definition of dealer will potentially
sweep in all manner of digital asset
markets participants including users who
merely participate in digital asset
liquidity pools the suit said the
definition of a dealer specifically
excludes persons buying or selling
securities for their own accounts the
suit noted highlighting the difference
between a dealer and a Trader the second
adopted the why in definition of a
dealer in February after a 3-2 vote in
favor describing it as a functional
analysis based on the Securities trading
activities undertaken by a person not
the type of security being trade the
regulator said it did consider excluding
crypto or at least certain aspects of
the crypto industry but found that doing
so might give crypto dealers an unfair
advantage over their traditional Finance
counterparts the commission undertakes
Ru making consistent with its
authorities and laws governing the
administrative process and will
vigorously defend the final dealer rules
in court and second spokesperson set in
a statement blockchain Association CEO
Kristen Smith said the rule was the
latest example of the second’s blatant
attempts to unlawfully regulate outside
its Authority skirting legal obligations
to address the numerous concerns
received during its compressed comment
period the dealer rule advances the
second’s anti-d digital asset Crusade
and unlawfully redefines the boundaries
of its statutory Authority granted to it
by Congress threatening to drive us
companies offshore and incite fear and
American innovators the statement set
Tuesday’s lawsuit also took on another
common crypto industry complaint that
the definition of a security and how it
applies to digital assets is not clear
for its part the commission has never
definitively stated which types of
digital asset transactions it believes
are securities transactions which has
caused significant uncertainty for the
digital assets industry the suit said
instead the commission has taken an ad
hoc approach to categorizing specific
digital assets as Securities either
through broad statements by individual
Commissioners or through peac me
enforcement actions and lawsuits this
means the industry does not know which
digital assets might be subject to the
dealer rule the suits sad
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The SEC adopted a broadened “dealer” definition that might capture crypto traders, the Blockchain Association and Crypto Freedom Alliance of Texas alleged.
A U.S. Securities and Exchange Commission rule expanding the definition of a “dealer” to capture digital assets activity has gone too far, a lawsuit by the Blockchain Association and Crypto Freedom Alliance of Texas alleged.
The suit, filed in the District Court for the Northern District of Texas on Tuesday, claims that the expanded definition of a dealer would also capture people who are just trading in digital assets. The suit alleges that the SEC did not engage with the feedback it received during the rule’s public comment period and did not conduct “its statutorily required economic analysis.”
The suit is asking the court to declare that the rule is “arbitrary, capricious or otherwise contrary to law” under the Administrative Procedures Act, and to block the SEC from enforcing the rule.
“Because of the rule’s, exclusive focus on post hoc effects of trading, the new definition of ‘dealer’ will potentially sweep in all manner of digital asset markets participants, including users who merely participate in digital asset liquidity pools,” the suit said.
The definition of a dealer “specifically excludes persons buying or selling securities for their own accounts,” the suit noted, highlighting the difference between a dealer and a trader.
The SEC adopted the widened definition of a “dealer” in February after a 3-2 vote in favor, describing it as “a functional analysis based on the securities trading activities undertaken by a person, not the type of security being trade.”
The regulator said it did consider excluding crypto, or at least certain aspects of the crypto industry, but found that doing so might give crypto dealers an unfair advantage over their traditional finance counterparts.
“The Commission undertakes rulemaking consistent with its authorities and laws governing the administrative process and will vigorously defend the final dealer rules in court,” an SEC spokesperson said.
In a statement, Blockchain Association CEO Kristin Smith said the rule was “the latest example of the SEC’s blatant attempts to unlawfully regulate outside its authority, skirting legal obligations to address the numerous concerns received during its compressed comment period.”
“The Dealer Rule advances the SEC’s anti-digital asset crusade and unlawfully redefines the boundaries of its statutory authority granted to it by Congress, threatening to drive U.S. companies offshore and incite fear in American innovators,” the statement said.
Tuesday’s lawsuit also took on another common crypto industry complaint, that the definition of a security and how it applies to digital assets is not clear.
“For its part, the Commission has never definitively stated which types of digital asset transactions it believes are securities transactions, which has caused significant uncertainty for the digital assets industry,” the suit said. “Instead, the Commission has taken an ad hoc approach to categorizing specific digital assets as securities, either through broad statements by individual Commissioners or through piecemeal enforcement actions and lawsuits.”
This means the industry does not know which digital assets might be subject to the dealer rule, the suit said.
https://www.coindesk.com/policy/2024/04/23/crypto-lobbyists-sue-sec-over-dealer-definition/
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