Crypto lobbyists file lawsuit against SEC on ‘dealer’ definition

The Blockchain Association and the Crypto Freedom Alliance of Texas have taken legal action against the U.S. SEC.

The two groups contend that the SEC is instituting a new rule, adopted in February, that would negatively impact the crypto industry. The SEC’s rule extends federal securities laws to market participants with significant liquidity-providing roles, encompassing cryptocurrency transactions.

The complaint, filed on Monday in a Texas district court, cites violations of the Administrative Procedures Act (APA), which governs federal agency rulemaking.

“Before more harm can be done by this rabid regulator, we are seeking declaratory judgment and injunctive relief against the SEC to overturn their rule expansion and prohibit its use against our industry,” said Blockchain Association CEO Kristin Smith.

The rule applies to crypto assets that meet the definition of securities or government securities, with exceptions for assets valued under $50 million, including defi.

The new SEC rule received significant backlash from crypto industry groups.