Blockchain Association (BA) and the Crypto Freedom Alliance of Texas (CFAT) filed a lawsuit against the Securities and Exchange Commission’s (SEC) Dealer Rule, claiming it overstepped previous rules laid out by the SEC and was not clear regarding digital assets. 

The lawsuit, filed in the Northern District of Texas, says the new Dealer Rule enacted by the SEC in February of 2024 “threatens to bulldoze these innovations and potentially much of the burgeoning digital assets industry” because it imposes conventional market definitions of a “dealer” onto digital market spheres without adaptation from the original definition laid out in the Securities Exchange Act of 1934.

The SEC dismissed these concerns when brought up by digital assets industry commentators during the 39-day comment period on the new rule, and did not “ substantively engage” with the concerns, according to the lawsuit. 

“This is the latest example of the SEC’s blatant attempts to unlawfully regulate outside its authority, skirting legal obligations to address the numerous concerns received during its compressed comment period,” BA CEO Kristin Smith said. “The Dealer Rule advances the SEC’s anti-digital asset crusade and unlawfully redefines the boundaries of its statutory authority granted to it by Congress, threatening to drive U.S. companies offshore and incite fear in American innovators.”

Washington D.C. based Blockchain Association is an advocacy organization “dedicated to promoting a pro-innovation policy environment for the digital asset economy,” according to their website. Founded in 2018, the current CEO is Kristin Smith.