A federal court has ruled that the Securities and Exchange Commission (SEC) exceeded its authority with its controversial dealer rule, invalidating it as a violation of the Exchange Act. The Blockchain Association and the Crypto Freedom Alliance of Texas (CFAT) challenged the rule in court, arguing that it expanded the SEC’s jurisdiction and created uncertainty for digital asset innovators.
The court agreed, describing the SEC’s definition of “dealer” as “untethered from the text, history, and structure” of the law. The dealer rule, introduced earlier this year, aimed to broaden the regulatory scope for market participants dealing in securities. Critics said it would impose onerous compliance burdens on blockchain developers and small businesses, stifling innovation in the rapidly growing sector.
The ruling is expected to have far-reaching implications for digital asset regulation, signaling that judicial scrutiny of the SEC’s policies may intensify.
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