Since the establishment of the Administrative Procedure Act (APA) in 1946, federal government agencies have been required to follow certain processes to ensure transparency, accountability, and public participation in the rulemaking process. This is crucial to allow the American people to have a say in the rules that govern various aspects of our lives, such as food safety and tax regulations.
The Securities and Exchange Commission (SEC) has recently finalized a rule that expands the definition of a “dealer” under U.S. securities laws. This new definition includes individuals whose trading activities provide liquidity, even if they do not have direct customers. This broadened definition has raised concerns among market participants and has led to two lawsuits challenging the rule’s finalization.
The expanded definition of a dealer by the SEC has the potential to create instability and risks in the market. It also goes against long-standing legal precedent and violates the APA. The SEC’s failure to engage with industry feedback and provide clear guidelines on compliance has left many in the digital asset industry uncertain about the future implications of the rule.
The lack of transparency and accountability in finalizing the Dealer Rule has prompted organizations like the Blockchain Association and the Crypto Freedom Alliance of Texas to file lawsuits against the SEC. These legal actions aim to hold the SEC accountable for violating the APA and exceeding its Congressional authority in changing the definition of a dealer.
The courts play a crucial role in ensuring that government agencies like the SEC abide by the law and consider the impact of their actions on industries and businesses. The recent decision by the Supreme Court to overturn the Chevron doctrine signals a shift towards limiting regulatory interpretations that may harm American businesses and consumers.
It is essential for the courts to intervene and overturn the Dealer Rule to prevent its harmful effects on the digital asset industry. By upholding the principles of the APA and promoting transparency and accountability in agency decision-making, the courts can protect American innovation and competitiveness in the global marketplace.