Texas court asks SEC to throw out controversial rule redefining 'dealer' term

The Texas court has ordered the U.S. Securities and Exchange Commission (SEC) to rescind a controversial rule that broadly redefined the term "Dealer," impacting the crypto industry and traditional financial companies. The rule was passed by a 3-2 vote of the SEC commissioners in February. Judge Reed O'Connor found the rule to be beyond the SEC's statutory authority. Traditionally, a Dealer is an entity that buys and sells securities for its own account, not for others. The SEC's expanded definition sought to include any entity that plays a role in providing market liquidity, particularly in the U.S. Treasury market. In other words, the expanded interpretation effectively eliminated the traditional distinction between Traders and Dealers.