SEC Backs Off Tight Regulation of Cryptocurrency and DeFi
Date: 2025-02-21 Author: Henry Casey Categories: CRYPTO PAYMENTS
On February 19, the SEC filed a request to dismiss its appeal of a ruling that blocked the expansion of the Commission’s jurisdiction over cryptocurrency and decentralized finance (DeFi) market participants.
In February 2024, the SEC revised its definition of “dealer,” expanding it to cover a broader range of financial transactions, including cryptocurrency transactions. The new requirements required investors and organizations holding more than $50 million in digital assets to register with the agency. The rules were scheduled to go into effect in April 2025, but there was resistance within the SEC itself, with Commissioners Mark Ueda and Hester Peirce opposing the initiative.
Strong opposition from the industry came from the Blockchain Association and the Crypto Freedom Alliance of Texas. The organizations filed a lawsuit against the SEC, arguing that its actions violate the Administrative Procedure Act by unreasonably expanding the definition of a “dealer.” The plaintiffs’ statement noted that the Commission’s initiatives could have “catastrophic” consequences for the entire industry.
In November 2024, a federal court in Texas ruled in favor of the crypto industry, ruling that the SEC had exceeded its authority by extending traditional exchange regulations to digital assets. Despite an attempt to appeal, the Commission filed an appeal in January 2025, but has now officially dropped it.
“Today, we finally defeated the SEC in the dealer regulation case. The Commission’s refusal to appeal is a great relief to the crypto sector. Now the industry can move forward with confidence,” said Christine Smith, CEO of the Blockchain Association.
The changes in the SEC’s leadership also affected the overall direction of the agency’s policy. On January 20, Gary Gensler, who had been criticized by the crypto community for his overly harsh approach to digital assets, stepped down as chairman. Mark Ueda became acting head of the Commission, and Hester Peirce headed the cryptocurrency working group. Among the key priorities, she highlighted the revision of the criteria for classifying digital assets as securities.
In addition, it became known that President Donald Trump nominated Paul Atkins, a former commissioner of the agency known for his cryptocurrency views, for the post of SEC chairman.
