The Texas Crypto Freedom Alliance (CFAT) has joined forces with the Blockchain Association (BA) to bring a legal case against the U.S. Securities and Exchange Commission (SEC).

As per a recent announcement from the Blockchain Association, the CFAT and BA have jointly filed a lawsuit against the SEC in a North Texas court. The lawsuit is centered around the SEC’s interpretation of the “dealer rule,” which the CFAT and BA believe could have negative implications for the cryptocurrency industry.

The plaintiffs are seeking to challenge the SEC’s dealer rule based on alleged violations of the Administrative Procedure Act (APA) by the SEC. They particularly criticize the SEC’s broadening of the dealer rule’s definition, arguing that it deviates from its historical interpretation.

The SEC’s expanded interpretation of the dealer rule aims to include market participants who function as liquidity providers, mandating them to register and adhere to more stringent regulations. The plaintiffs express concerns that this rule is overly ambiguous and could mistakenly categorize cryptocurrency market participants as dealers.

Kristin Smith, CEO of the Blockchain Association, stated, “The SEC’s actions represent a clear overreach beyond its jurisdiction, sidestepping its legal responsibilities to address the numerous feedback received during its rushed comment period. The Dealer Rule is part of the SEC’s anti-digital asset agenda and improperly redefines the limits of its authority granted by Congress, potentially driving U.S. businesses offshore and instilling fear in American innovators.”

Both the Blockchain Association and the Crypto Freedom Alliance of Texas advocate for progressive regulations that support the growth of the cryptocurrency industry.

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