According to ChainCatcher news, a court in Texas 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 vote of 3 to 2, exceeding the statutory authority of the U.S. Securities and Exchange Commission. Traditionally, dealers refer to entities that buy and sell securities for themselves rather than for others. The SEC expanded the definition, attempting to include any entity capable of providing market liquidity, especially in the U.S. Treasury market.
The footnote in the original proposal draft clearly states 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 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 excessively interfered in the cryptocurrency sector and conflicted with the laws governing registered securities dealers, which have been in place for 90 years.
