The despised Dealer Rule sought to expand the definition of a financial dealer to encompass DeFi liquidity providers.
The regulatory tide is turning for crypto, with a Texas court quashing the U.S. Securities and Exchange Commission’s efforts to expand the definition of a dealer to target DeFi.
On Nov. 21, District Judge Reed O’Connor of the Northern District of Texas struck down the rule after determining the attempted change exceeded the SEC’s regulatory jurisdiction.
“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 O’Connor said. “The Dealer Rule violates the [Administrative Procedure Act], requiring the Court to vacate or ‘set aside’ the Rule,”
The SEC passed the rule in February, requiring that any liquidity provider commanding at least $50 million worth of securities register as a securities dealer, with the SEC explicitly naming “crypto asset securities” as applying. “If anyone trades in a manner consistent with de facto market making, [they] must register with us as a dealer,” the SEC said at the time.”
The judge’s determination concluded a case challenging the rule from the pro-crypto organizations Blockchain Association and Crypto Freedom Alliance of Texas, and a second case brought by the Managed Funds Association alongside other investment industry advocacy groups.
The SEC said it is reviewing the decision.
https://thedefiant.io/news/regulation/crypto-community-celebrates-court-rejecting-sec-dealer-rule
