Thursday brought much news as the SEC moved to withdraw its appeal related to the Broker-dealer rule. The reversal is quintessential to potentially changing the digital currencies or crypto industry motion.
On February 19th, the United States Securities and Exchange Commission — or as some like to call it the SEC — filed a motion to drop their appeal on the federal court’s decision regarding the broker-dealer rule. The dropping of this appeal is a big step in the evolution of the SEC’s approach to crypto.
In February 2024, Biden administration SEC added a new DeFi clause that associated platforms and similar entities with a capital of $50 million with dealers and brokers. Such automatic classification required these crypto firms to tightly follow requirements for registration and other compliance like any ordinary businessman would.
This is the legislation that was enacted to protect crypto space. The result of it was massive opposition from the entire community. Many experts have contended that this categorization imposes unrealistic regulatory limitations on other platforms without genuine mobilization goals.
Therefore, the Blockchain Association, Crypto Freedom Alliance of Texas, and several other organizations took the proposed regulation to court. The main argument was that the SEC had overstepped its legal authority.
The Blockchain Association characterized, in a tweet, the driving force for initiating the court action as wishing “to strike down their vaguely crafted and arbitrarily imposed Dealer Rule expansion. The rule kills innovation, damages the new digital asset market, and gives the SEC leeway to practice guidance-by-implied rule that serves it instead of benefiting its subjects.”
Changing Tides
After almost a year of proposing the rule, the SEC finally dropped it and eliminated the clause. The move was greeted with jubilation immediately. There were already concerns that the rule was too strict and prohibitive. The news of the SEC dropping the rule was thus welcome to crypto enthusiasts.
SEC commissioner Hester Peirce had called the rule illegal power-grabbing and even opined that the SEC had overstepped its boundaries in trying to exert its power. The observation was not out of line with the sentiments of crypto players against the SEC’s broker-dealer rule promulgation. Thus, the SEC action to finally pull the rule could mark a new dawn in the sector.
