Texas Judge Invalidates SEC's Expanded Dealer Rule; Major Victory for Crypto Industry

Nov 21, 2024, 05:32 PM

A federal judge in Texas has invalidated the U.S. Securities and Exchange Commission's (SEC) Dealer Rule, stating that the agency exceeded its statutory authority and acted in an arbitrary and capricious manner. The rule, which sought to broaden the definition of 'dealer' and remove the traditional distinction between 'traders' and 'dealers' established over 90 years, would have required certain firms, including those in the crypto and decentralized finance (DeFi) sectors, to register as dealers with the SEC. The court refused to allow such a broad expansion of the Exchange Act, holding that the SEC defied Congress's will. The lawsuit challenging the rule was brought by the Blockchain Association and CryptoFreedomTX, with support from entities like Paradigm. This decision is seen as a significant victory for the crypto industry against Gary Gensler's SEC and prevents what could have been a critical blow to DeFi. The ruling continues a series of legal setbacks for the SEC in its efforts to tighten control over Wall Street and the burgeoning crypto market.