CoinVoice has recently learned that a Texas court ordered the U.S. Securities and Exchange Commission to repeal a controversial rule that broadly redefined the term 'dealer,' impacting both financial companies focused on cryptocurrency and traditional financial firms.
Judge Reed O’Connor found that the rule was passed in February by a 3-2 vote, exceeding the statutory authority of the U.S. Securities and Exchange Commission. Traditionally, a trader refers to an entity that buys and sells securities for itself rather than on behalf of others. The SEC expanded the definition in an attempt to include any entity capable of providing market liquidity, especially in the U.S. Treasury market.
In a footnote of the original proposal draft, it was explicitly stated that those 'engaged in cryptocurrency securities trading' must comply with securities laws, register with the U.S. Securities and Exchange Commission, and join industry-supported self-regulatory organizations. Initially, participants in the cryptocurrency industry objected to the rule. The expanded interpretation effectively eliminated the distinction between 'traders' and 'dealers' in the traditional understanding.
The Texas Blockchain Association and the Crypto Freedom Alliance filed a lawsuit against the securities regulator in April (the month the rule officially took effect), claiming that the rule's intervention in the cryptocurrency space was excessive and that it conflicted with existing laws regulating securities dealers, which have been in place for 90 years. [Original link]