A legal battle is underway against the U.S. Securities and Exchange Commission (SEC) as the Blockchain Association and the Crypto Freedom Alliance of Texas (CFAT) have filed a lawsuit challenging a recent regulation that expands the definition of a “dealer” in the context of digital assets. The lawsuit, filed in the Northern District of Texas District Court, aims to reverse this broadened interpretation.
The plaintiffs argue that the proposed change could unfairly categorize ordinary individuals who engage in digital assets as dealers. Their concern stems from the rule’s focus on the consequences of trading rather than the characteristics of transactions.
The main contention is that the law fails to distinguish between dealers and regular traders who operate with their own accounts. The lawsuit claims that the SEC ignored public comments and neglected to conduct an economic analysis, both of which are required by law.
In February, the SEC approved the revised dealer definition with a 3-2 vote, emphasizing a practical evaluation of securities trading activities. The regulator defended its decision by stating that excluding crypto from this classification could give crypto dealers an unfair advantage over more traditional financial institutions.
Critics argue that the SEC’s stance on digital assets is inconsistent and has caused uncertainty in the industry. The commission has yet to provide a clear definition of which transactions involving digital assets should be considered securities transactions. This ambiguity has led to accusations that the SEC applies ad hoc methods to designate digital assets as securities, further complicating regulation.
In other cryptocurrency news, Binance has introduced Spot Copy Trading, offering automated trading advantages.