TechFlow reports, on November 22, according to The Block, a court in Texas has ordered the U.S. Securities and Exchange Commission (SEC) to rescind a controversial rule that broadly redefined the term "dealer," impacting both the crypto industry and traditional financial firms.
The rule was approved in February by a 3-to-2 vote of SEC commissioners, but the court found it exceeded the SEC's statutory authority. Traditionally, a dealer refers to an entity that buys and sells securities for its own account, rather than on behalf of others. The expanded definition sought to include any entity whose activities have the effect of providing market liquidity, particularly in the U.S. Treasury market.
Crypto industry participants initially objected to the rule, as a footnote in the original proposal explicitly stated that entities involved in "crypto security transactions" would be required to comply with securities laws, register with the SEC, and join a self-regulatory organization supported by the industry. In effect, the expanded interpretation eliminated the traditional distinction between "trader" and "dealer."
