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- Under new leadership, the SEC dropped its appeal against a lawsuit challenging its dealer rule expansion, marking a major crypto victory.
- The rule targeted high-frequency traders and DeFi liquidity providers with over $50M, threatening decentralization.
- The agency’s reversal signals a shift toward fairer regulation, raising hopes for clearer crypto policies under new leadership.
Following intense enforcement by then SEC Chief Gary Gensler over the course of many years, the tables are turning for crypto in the US. Eleanor Terrett exposed that the Securities and Exchange Commission (SEC), with acting Chief Mark Uyeda at the head of the commission, had dropped the case of a lawsuit that had been filed to contest its controversial dealer rule expansion. This decision marks a major shift in the agency’s approach and signals a potential new era of regulatory clarity for crypto firms.
The SEC’s proposed dealer rule tried to redefine a broker-dealer to encompass the highest frequency traders and certain crypto hedge funds. If implemented, this reform would have made the liquidity providers and automated market makers (AMMs) with more than $50 million of capital register with the SEC. For the decentralized finance (DeFi) ecosystem, this was a threat to their existence itself because complying would have essentially been out of the question for the platforms without central management.
Crypto advocacy groups such as the Blockchain Association and the Crypto Freedom Alliance of Texas sued the SEC, alleging that the agency had gone too far. In November, a judge in the state of Texas ruled favorably to the crypto industry by prohibiting the SEC’s plan and significantly reducing its enforcement plan.
SEC Shocks Crypto Industry Drops Appeal
The SEC had a change of heart on February 19, surprising everyone by withdrawing its appeal. This officially ended the case and sent a message that no further regulatory overreach would go unrestrained. According to Kristin Smith, CEO of the Blockchain Association, it was a “complete and total victory” for the crypto industry, insisting that innovation can no longer be threatened by excessive intervention.
Crypto experts have interpreted the SEC’s backtracking to mean that the regulator is giving up on its hardline stance. An industry commentator also suggested that the unelected bureaucrats had attempted to snuff out crypto innovation through unrestrained regulative expansion but were ultimately restrained by the courts and new management. DOGEai highlighted this major victory for the sector to signal that pro-growth policies are on the way.
New Faces of Crypto Regulation in U.S.
The SEC’s shift comes amid a broader change in leadership. With Gensler’s exit, President Donald Trump has reshaped the agency, appointing Mark Uyeda as acting chair while his nominee, Paul Atkins, awaits congressional approval. Uyeda’s leadership has already sparked hope for a more balanced approach to crypto regulation.
One of the most notable changes under the new regime is the establishment of a dedicated Crypto Task Force, led by Commissioner Hester Peirce widely known for advocating fair and clear regulations. The task force is expected to reassess many of the enforcement actions taken against crypto firms during Gensler’s tenure, potentially rolling back policies that stifled innovation.
Related | Montana Moves Closer to Holding Bitcoin Reserves Amid Growing State-Level Crypto Adoption
