SEC ends appeal over crypto dealer rule expansion
The U.S. Securities and Exchange Commission (SEC) has dropped its appeal of a court ruling that blocked its attempt to expand the definition of a "dealer," a move seen as favorable for the crypto industry.
The SEC filed to voluntarily dismiss the appeal with the Fifth Circuit Appeals Court on February 19, a move that was unopposed.
The initial lawsuit was filed in April 2024 by the Blockchain Association and the Crypto Freedom Alliance of Texas.
The Texas court ruled that the SEC's proposed change to the definition of a dealer exceeded its statutory authority.
The SEC’s proposed change would have required crypto liquidity providers and automated market makers with over $50 million in capital to register with the agency.
The industry argued that the rule would have imposed impractical requirements on DeFi protocols, especially regarding Know Your Customer and Anti-Money Laundering laws.
The SEC's decision to drop the appeal is viewed as a victory for the crypto industry.
Blockchain Association CEO Kristin Smith hailed the decision as a "complete and total victory."
This move comes amid broader changes at the SEC following the departure of former Chair Gary Gensler.
Under acting chair Mark Uyeda, the SEC has formed a Crypto Task Force, led by Commissioner Hester Peirce, to develop a framework for digital assets.
The agency has also delayed or paused litigation against crypto firms, seemingly to reconsider these actions based on advice from the Crypto Task Force.
Some legal experts are calling the SEC's move the "death knell" for the dealer rule.
Cryptocurrencies reacted positively to the news, with Bitcoin (CRYPTO:BTC), Ethereum (CRYPTO:ETH), and XRP (CRYPTO:XRP) showing gains.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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