Texas Judge Overturns SEC's "Dealer Rule," Marking Major Victory for Crypto Industry

A Texas judge recently overturned the SEC's controversial "dealer rule." This decision is a big win for crypto stakeholders.

Earlier this year, the SEC introduced a new rule. It required market participants engaged in certain dealer roles, like providing liquidity, to register with the Commission and follow federal securities laws.

Private fund managers, alternative asset managers, and crypto firms pushed back. They argued that the rule was overly broad and an overreach of the SEC's authority.

In March, trade associations representing these groups filed a lawsuit against the SEC in the U.S. District Court for the Northern District of Texas.

Following that, crypto stakeholders, backed by the Crypto Freedom Alliance of Texas (CFAT) and the Blockchain Association (BA), filed a similar lawsuit in April.

This week, U.S. District Judge Reed O’Connor ruled against the SEC in both cases. He vacated the new rule entirely.

The judge explained, “The Rule as it currently stands de facto removes the distinction between ‘trader’ and ‘dealer’ as they have commonly been defined for nearly 100 years. The Court refuses to allow such a broad expansion of the Exchange Act by way of this Rule. In addition to the reasons provided in the Related Case, the Court concludes that the Dealer Rule impermissibly exceeds the SEC’s statutory authority.”

This ruling marks a significant moment for the crypto community. It emphasizes the ongoing debate about regulatory authority in the evolving landscape of digital assets.