The U.S. Securities and Exchange Commission (SEC), under acting chair Mark Uyeda, has withdrawn its appeal in the lawsuit over its dealer rule expansion. The move follows a Texas court ruling that struck down the rule, calling it “untethered” from existing laws. The lawsuit was brought by the Blockchain Association and the Crypto Freedom Alliance of Texas (CFAT) in April 2024.
The decision marks a victory for the crypto industry, which viewed the rule as an attempt to impose regulatory control over certain trading firms. The withdrawal signals a shift in the SEC’s enforcement strategy under new leadership.
US SEC Ends Legal Battle Over Dealer Rule
The SEC’s dealer rule sought to expand the definition of a dealer to include high-frequency trading firms and specific crypto hedge funds. Industry groups argued that the rule was an indirect attempt to regulate crypto trading platforms without congressional approval.
A Texas court struck down the rule, stating that it exceeded the SEC’s authority. The SEC initially appealed the decision but has now voluntarily dismissed the appeal. The withdrawal ensures that the dealer rule will not take effect.
Blockchain Association CEO Kristin Smith welcomed the decision, stating, “We first brought this lawsuit to challenge the agency’s unlawful power grab. With today’s final dismissal, we look forward to constructive discussions with the SEC.”
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