A lawsuit has been filed against the U.S SEC by the Blockchain Association and the Crypto Freedom Alliance of Texas (CFAT). The lawsuit aims to challenge a recent regulation that has expanded the definition of a “dealer” in the digital assets context. The plaintiffs argue that this change may unfairly classify ordinary individuals who engage in digital assets as dealers. They are concerned that the emphasis on the consequences of trading, rather than the characteristics of transactions, may lead to this unjust classification.
The main argument put forth by the plaintiffs is that the law fails to distinguish between dealers and regular traders who work for their own accounts. They claim that the SEC ignored public comments and did not conduct the required economic analysis, thus bypassing crucial processes.
In February, the SEC adopted the revised dealer definition with a 3-2 vote, placing emphasis on a practical evaluation of securities trading operations. The regulator defended its decision by stating that including crypto in this classification is necessary to prevent crypto dealers from having an unfair advantage over more traditional financial companies.
Critics argue that the SEC’s position on digital assets is contradictory and has created uncertainty in the sector. The commission has yet to provide a clear definition of which transactions involving digital assets can be considered securities transactions. This ad hoc approach to designating digital assets as securities adds to the complexity of regulations.
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