The Blockchain Association and the Crypto Freedom Alliance of Texas have filed a lawsuit against the US Securities and Exchange Commission (SEC), alleging that the SEC exceeded its authority by enacting a rule that redefines the criteria for identifying a "dealer" of securities. In a court filing dated April 23, the groups argued that this action was "arbitrary and capricious" and violated the Administrative Procedure Act (APA).

Kristin Smith, CEO of the Blockchain Association, criticized the rule as another instance of the SEC's unlawful attempt to regulate beyond its jurisdiction and evade legal obligations. Smith stated, "The Dealer Rule is part of the SEC's ongoing effort to unfairly regulate digital assets and exceeds the boundaries of its authority granted by Congress, potentially driving US companies offshore and causing apprehension among American innovators."

As a result, they are seeking the Court to invalidate the SEC's Dealer Rule due to the regulator's violations of the APA, which hinder industry participants from operating under clearly defined rules established through a fair and transparent rulemaking process.

Marissa Tashman Coppel, the legal lead at the Blockchain Association, emphasized the detrimental impact of the SEC's rule on the digital asset ecosystem, particularly decentralized finance (DeFi). Despite the rule's ambiguity, she argued that it implicates liquidity providers, DeFi software, and developers. Coppel pointed out that the SEC failed to address numerous concerns raised by industry stakeholders during the comment period, such as clarifying which crypto asset transactions qualify as securities transactions, making compliance determination even more challenging.

The Blockchain Association, comprising notable crypto companies like Coinbase, Kraken, Circle, and Ripple, has a broad member base and advocates for fair and transparent regulations in the crypto space.