The Blockchain Association and the Crypto Freedom Alliance of Texas have filed a lawsuit against the U.S. SEC, arguing that a newly adopted rule in February will adversely affect the cryptocurrency industry. This rule extends federal securities laws to market participants playing significant roles in liquidity provision for cryptocurrency transactions.
Filed in a Texas district court on Monday, the complaint alleges violations of the Administrative Procedures Act (APA), which governs federal agency rulemaking.
Kristin Smith, CEO of the Blockchain Association, stated, “Before further harm is inflicted by this aggressive regulator, we seek declaratory judgment and injunctive relief against the SEC to overturn their expanded rule and prevent its application to our industry.”
The rule applies to crypto assets meeting the definition of securities or government securities, with exemptions for assets valued under $50 million, including decentralized finance (DeFi).
The crypto industry has strongly criticized the new SEC rule. “In summary, the Commission inexplicably refused to exempt the digital assets industry or provide a clear explanation of how and when the rule would affect these emerging markets,” noted the complaint filed jointly by the Blockchain Association and the Crypto Freedom Alliance of Texas.
The SEC defended its actions, asserting that its rulemaking adheres to mandates and legal frameworks governing administrative procedures, and it intends to vigorously defend the final regulations in court.
This lawsuit adds to a series of legal challenges the SEC has faced over the past year. In February, the Crypto Freedom Alliance of Texas and digital asset company LEJILEX filed a joint lawsuit against the SEC, accusing it of unfairly targeting the crypto industry.
Additionally, last month, the DeFi Education Fund and Texas-based apparel company Beba sued the SEC over APA violations. Last year, cryptocurrency exchange Coinbase also sued the SEC seeking clarity on its rulemaking petition.
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