TLDR
- SEC withdraws dealer rule appeal under new leadership of Mark T. Uyeda, marking victory for crypto industry
- Original dealer rule required certain market participants to register if they met specific trading criteria
- Blockchain Association and Crypto Freedom Alliance of Texas successfully challenged the rule in court
- New SEC administration establishes Crypto Task Force led by Commissioner Hester Peirce
- SEC pauses ongoing litigation against major crypto exchanges to reassess regulatory strategies
The U.S. Securities and Exchange Commission (SEC) has withdrawn its appeal in the lawsuit challenging the dealer rule, marking a clear shift in the agency’s approach to cryptocurrency regulation under new leadership.
The motion to dismiss was filed on February 19 in the U.S. Court of Appeals for the Fifth Circuit. This action ends a legal battle that began in April 2024 when the Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT) first challenged the rule.
The dealer rule, introduced in February 2024, required market participants to register with the SEC if they regularly expressed trading interest close to the best price on both sides of the market for the same security. The rule also applied to those who earned revenue primarily from capturing bid-ask spreads or from trading venue incentives.
Under the rule’s requirements, affected parties would have needed to register with the commission, join a self-regulatory organization, and follow federal securities laws and regulatory obligations.
The crypto industry strongly opposed these requirements when they were first announced. Industry groups warned that the rules could harm market innovation, increase costs, and reduce market access and competition.
In response to these concerns, digital asset firms filed a complaint in Texas against the SEC and then-Chairman Gary Gensler. The U.S. district court for the Northern Texas district later ruled to vacate the dealer rule, citing Congress’s historical definition of a dealer as someone who has customers.
The SEC’s appeal of this decision came in January 2025, during the final days of Gary Gensler’s leadership. However, the appointment of Mark T. Uyeda as Acting Chairman brought immediate changes to the agency’s approach.
New Direction Under Uyeda
Under Uyeda’s leadership, the SEC has created a new Crypto Task Force headed by Commissioner Hester Peirce, who has previously supported crypto-friendly policies. This task force aims to develop clear rules for digital assets, moving away from the enforcement-focused approach of the previous administration.
The SEC has also paused ongoing legal actions against major cryptocurrency exchanges, including Binance and Coinbase, while the new task force reviews regulatory strategies.
Blockchain Association CEO Kristin Smith welcomed the SEC’s decision to drop the appeal. “It’s a new day at the SEC following former Chair Gensler’s crusade against crypto – today’s voluntary dismissal by the agency is welcome news,” Smith said.
Both parties in the lawsuit have agreed to cover their own legal costs, according to the motion signed by SEC Senior Special Counsel Samuel B. Goldstein.
Industry groups across the financial sector have responded positively to the SEC’s decision. Jack Inglis, chief executive of AIMA, praised the move and emphasized that hedge funds are not dealers as they do not have customers.
Marisa Coppel, Head of Legal at the Blockchain Association, highlighted the importance of using litigation to protect the industry from regulatory overreach.
“Today, we celebrate this resounding victory for the innovators, entrepreneurs, and builders across America,” she stated.
The motion to dismiss officially closes this chapter of crypto regulation at the SEC, with the agency’s new leadership indicating a willingness to work more collaboratively with the digital asset industry.
This latest action aligns with broader changes in the SEC’s approach to cryptocurrency regulation under Acting Chairman Uyeda’s leadership, suggesting a move toward more defined and practical oversight of digital assets.
