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SEC Drops Appeal on Crypto Dealer Rule
The U.S. Securities and Exchange Commission (SEC) has decided to withdraw its appeal on a rule that would have broadened the definition of securities dealers to include many crypto-related businesses. This decision marks another step in the agency’s ongoing shift in its approach to digital assets.
Shift in SEC’s Crypto Strategy
For years, the SEC took a tough stance against the crypto industry, but under new leadership, that approach is changing. The agency has been scaling back its legal battles, especially after a Texas federal judge ruled that the SEC had “exceeded its statutory authority” in trying to enforce the expanded dealer rule. The lawsuit, filed by the Blockchain Association and the Crypto Freedom Alliance of Texas, challenged the rule’s legitimacy.
Kristin Smith, CEO of the Blockchain Association, welcomed the SEC’s retreat, stating, “With new leadership steering the agency, we look forward to constructive discussions and a brighter future for digital assets in the U.S.”
The Controversial Dealer Rule
The dealer rule, introduced under former SEC Chairman Gary Gensler, aimed to regulate crypto businesses under existing securities laws. However, the industry argued that the rule placed unrealistic demands on decentralized finance (DeFi) platforms and wrongly classified crypto traders who don’t provide dealer services.
An SEC spokesperson explained the decision to drop the appeal, saying, “The rule risked classifying nearly anyone trading securities as a dealer. Pursuing the appeal further could have also reduced Treasury market liquidity, increased volatility, and raised costs for taxpayers.”
Leadership Overhaul at the SEC
Since Mark Uyeda took over as acting SEC chairman, he has aggressively restructured the agency’s senior staff and legal approach to crypto. Once the U.S. Senate confirms Trump’s permanent SEC pick, Paul Atkins, similar policies are expected to continue.
SEC’s Approach to Binance and Other Cases
In another significant shift, the SEC recently sought to pause its legal battle with Binance over alleged securities violations. The agency is now exploring alternative ways to resolve the matter, signaling a broader shift in enforcement strategy.
