SEC Reverses Course, Dismisses Its Own Crypto Rulemaking Case Appeal

The Securities and Exchange Commission on Wednesday voluntarily dismissed its appeal of a ruling that prevented the agency from expanding existing securities laws to cover decentralized finance, or DeFi, users and projects.

In a four-page motion filed by the SEC in the U.S. Court of Appeals for the Fifth Circuit, the agency said it wished to “voluntarily dismiss this appeal,” a move that went unopposed.

In November, a federal judge in Texas found the SEC’s expansion of the legal definition for “dealer” exceeded the regulator’s authority. Modifications to the SEC’s dealer rule were unlawful, the judge found, because it conflated DeFi traders with financial brokers.

The SEC’s voluntary dismissal of its appeal represented a major win for the digital assets industry, Blockchain Association CEO Kristin Smith said in a statement.

“We first brought our lawsuit against the SEC to challenge the agency’s unlawful power grab, which sought to unilaterally redefine the boundaries of its statutory authority,” she said. “With new leadership at the agency leading to today’s final dismissal, we’re looking forward to productive conversations between industry and the SEC moving forward.”

Editor’s note: This story is breaking and will be updated with additional details.

Edited by Andrew Hayward