Providing liquidity will be regarded as a "securities dealer", the blockchain association sues the SEC

Blockchain Association sues SEC

According to an announcement from the Blockchain Association, the Blockchain Association has cooperated with the Crypto Freedom Alliance of Texas (CFAT) to target the U.S. Securities and Exchange Commission’s (SEC) new definition of “securities market dealer.” File a lawsuit.

The lawsuit was filed in the Northern District Court of Texas and seeks to request the court to rule to abolish the SEC's dealer rules. It alleged that the SEC violated the Administrative Procedure Act and illegally expanded the definition of "dealer" in the Securities Exchange Act of 1934.

LP is considered a securities dealer

In February this year, the SEC adopted a new framework that defined liquidity providers (LPs) commonly seen in DeFi as traders, which requires LPs to comply with the same regulatory requirements as securities dealers in traditional financial markets.

The SEC’s new dealer definition not only triggered outcry in the crypto community, but SEC Commissioners Hester Pierce and Mark Uyeda also expressed opposition.

( What is temporary loss/impermanent Impermanent Loss? Uniswap, Curve, Balancer )

Blockchain Association: New framework cannot be implemented

Kristin Smith, CEO of the Blockchain Association, believes that the new framework is an "unimplementable rule" for the encryption field and will hinder innovation in the digital asset ecosystem.

He said:

Even though the SEC is legally required to respond, the SEC continues to ignore the concerns raised in the public comment period and comment letters. This is the latest example of the SEC recklessly trying to illegally regulate outside the scope of its authority, shortening the comment period and dodging the large number of complaints received during the period. Comments expressing concerns. This has unlawfully redefined the scope of statutory powers granted by Congress, threatens to drive American companies overseas, and frightens new American entrepreneurs.

The Blockchain Association submitted a comment letter to the SEC as early as 2022, pointing out that the framework conflicts with the SEC's previous existing guidelines.

( The U.S. SEC plans to expand the definition of "securities dealer" to include digital assets, and the crypto is worried that DeFi may be half-completed )