Texas court strikes down SEC's dealer rule in win for crypto
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A federal court in Texas vacated a Securities and Exchange Commission rule that redefined a "dealer," in a win for the crypto industry.
Why it matters: It's the latest example of the courts bucking the longstanding precedent of deferring to administrative agencies, following the Supreme Court's decision in the Chevron case.
The latest: "The Court concludes that the SEC exceeded its statutory authority by enacting such a broad definition of dealer untethered from the text, history, and structure of the Exchange Act," Judge Reed O'Connor of the Northern District of Texas wrote in his opinion.
- "The Rule as it currently stands de facto removes the distinction between 'trader' and 'dealer' as they have commonly been defined for nearly 100 years. The Court refuses to allow such a broad expansion of the Exchange Act by way of this Rule," O'Connor wrote.
- Criticism of the rule extended well beyond the blockchain industry. O'Connor issued a similar ruling Thursday in a second case brought by the Managed Funds Association, Reuters reported.
What they're saying: "The Dealer Rule was an attempt by the SEC to advance the agency's anti-crypto crusade, unlawfully redefining the boundaries of its statutory authority granted by Congress," Kristin Smith, CEO of the Blockchain Association, said in a statement.
- The Blockchain Association brought the case in concert with the Crypto Freedom Alliance of Texas.
- "The way I see this is that this is the beginning of the dominos falling," Joshua Ashley Klayman, the head of the digital assets practice at the law firm Linklaters, told Axios.
- "We're reviewing the decision and will determine next steps as appropriate," an SEC spokesperson said.
The bottom line: It's another crypto-related loss in courts for Gary Gensler's SEC, coming on the same day that the agency chief announced the end of his tenure.
Editor's Note: This story has been updated to add the SEC's response to the ruling.
