The SEC has voluntarily dismissed the appeal in the case over the expansion of the traders rule, marking a shift in its regulatory approach toward the cryptocurrency industry.
The U.S. Securities and Exchange Commission (SEC) has voluntarily dismissed an appeal in a case over the expansion of the Dealer Rule, a move that sought to broaden its authority over certain companies related to the cryptocurrency sector. The decision, which comes after a Texas court ruled that the rule exceeded the SEC’s legal powers, marks a milestone in the legal battle between the regulator and the digital industry.
In addition to this, sources close to the agency suggest that the SEC may be willing to drop other cryptocurrency-related lawsuits, including the controversial case against Ripple, which has sparked debates over cryptocurrency regulation in the United States.
This potential shift in strategy coincides with changes in SEC leadership and President Donald Trump's plans to position the country as a global leader in the adoption of cryptocurrencies and emerging technologies.
Appeal withdrawn in SEC trader rule case
The SEC’s proposed Traders Rule sought to expand the definition of a “trader” to include high-frequency trading firms and hedge funds specializing in cryptocurrencies. However, the move was seen as an attempt to indirectly regulate cryptocurrency trading platforms without Congressional backing, so after reviewing the case, a Texas court decided to strike down the rule, arguing that the SEC had exceeded its authority in issuing it.
Although the regulator initially appealed this decision, it has now decided to dismiss the appeal, ensuring that the rule will not come into force. The reversal has been welcomed by industry groups, who see it as a victory against what they saw as an attempt to impose excessive regulations.
Blockchain Association Executive Director Kristin Smith said the decision opens the door to more constructive discussions with the SEC.
“The rule threatened to undermine the burgeoning digital asset industry and stifle innovation.
A district court ruled in our favor last November, but the SEC then appealed.
Today, under the agency’s new leadership, the SEC voluntarily dismissed their appeal, marking a complete victory in the case not only for us, but for innovators, entrepreneurs, and builders across America,” Smith commented.
What about lawsuits against cryptocurrency companies?
The Ripple case, which was filed in December 2020, has been one of the most iconic litigation cases in the SEC's recent history. In this case, the regulator accused Ripple of selling tokens deemed to be securities without proper registration. However, with the change in leadership at the SEC, there has been speculation that the regulator might be willing to drop the charges or at least soften its stance.
PREPARE YOUR WALLETFox Business' Eleanor Terrett notes that the regulator has put a pause on several legal cases against cryptocurrency companies, such as Ripple's. While the SEC is unlikely to drop the case entirely, the April 16 deadline could be a turning point. Experts note that the regulator is prioritizing cases with looming deadlines, which explains why no extensions have been requested in this matter, said Terrett.
A change of strategy: From implementation to the creation of clear regulations
Changes in SEC leadership following the departure of Gary Gensler and recent court decisions appear to be driving a fundamental shift in the financial regulator's strategy.
SEC Commissioner Hester Peirce has been a vocal critic within the agency, advocating for a more balanced approach to cryptocurrency regulation. Recently, Peirce claimed that the SEC is moving away from its enforcement policy and focusing on creating clear regulations governing the industry.
The agency is also awaiting approval of the nomination of Paul Atkins as SEC chairman, who must be confirmed by the Senate. Atkins, known for his more pro-innovation stance, could push for a change in the agency's leadership.
Added to all this are President Trump's plans to make the United States a global leader in the cryptocurrency sector. All of the above could be influencing this new direction perceived in the regulatory agency, suggesting that the SEC is moving towards a clearer and less conflictive stage of regulation, which could benefit the cryptocurrency industry in the long term.
Investing in cryptoassets is not fully regulated, may not be suitable for retail investors due to high volatility and there is a risk of losing all invested amounts.
