The U.S. Securities and Exchange Commission (SEC) has dropped its appeal against a court ruling that blocked a controversial broker-dealer rule, which would have expanded the agency’s oversight of decentralized crypto protocols.
Case History
In April 2024, crypto trade groups Blockchain Association and Crypto Freedom Alliance of Texas sued to stop the rule, which would have required crypto liquidity providers and automated market makers with more than $50 million in capital to register with the agency. Critics argued this would impose unrealistic compliance burdens on DeFi protocols.
Reaction to the Decision
In November 2024, Texas District Court Judge Reed O’Connor ruled that the SEC exceeded its statutory authority, blocking the agency’s proposal. Blockchain Association CEO Kristin Smith hailed the decision as a “complete and total victory”, declaring that the crypto industry can now “breathe a sigh of relief.”
Future of Crypto Regulation
Under new leadership, the SEC paused several crypto-related lawsuits launched under former Chair Gary Gensler and created a Crypto Task Force, led by Commissioner Hester Peirce, to develop a regulatory framework for digital assets.
The SEC's decision to drop the appeal marks a significant shift in the agency's approach to cryptocurrency regulation, giving the industry time and space to adapt to changes.
