Legal Action Taken Against SEC by Blockchain Association and Crypto Freedom Alliance of Texas

The Blockchain Association and the Crypto Freedom Alliance of Texas have taken a bold step in challenging the U.S. Securities and Exchange Commission (SEC) over a new rule that they believe could have detrimental effects on the crypto industry. The rule, adopted in February, extends federal securities laws to market participants involved in cryptocurrency transactions, a move that has sparked outrage among industry groups.

In a complaint filed in a Texas district court on Monday, the two groups accused the SEC of violating the Administrative Procedures Act (APA) with the implementation of this rule. Blockchain Association CEO Kristin Smith stated, “Before more harm can be done by this rabid regulator, we are seeking declaratory judgment and injunctive relief against the SEC to overturn their rule expansion and prohibit its use against our industry.”

The rule specifically targets crypto assets that meet the definition of securities or government securities, with exceptions for assets valued under $50 million, including decentralized finance (defi). The backlash from the crypto industry has been significant, with many expressing concerns over the stifling of innovation and the potential harm to the digital asset industry.

This lawsuit is just the latest in a series of legal challenges against the SEC in recent years. The SEC has defended its actions, stating that it conducts rulemaking in accordance with its mandates and the legal framework governing administrative procedures. The SEC intends to vigorously uphold the final dealer rules in court despite the opposition from industry groups.

The outcome of this legal battle could have far-reaching implications for the crypto industry and how it is regulated in the United States. Stay tuned for updates on this developing story.