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SEC Drops Case Against Crypto Firms – A Win for DeFi & Blockchain Innovation

Published by
Debashree Patra

After a decade-long crypto manipulation under gary gensler lead, the time has come when crypto will witness some serious changes in the US. Eleanor Terrett shared that the SEC, now led by Mark Uyeda, has decided to drop its appeal in a lawsuit over its dealer rule expansion. This rule would have classified high-frequency trading firms and some crypto hedge funds as dealers, which many in the crypto space saw as a way to regulate trading firms without direct rules. SEC’s U-turn seems to be a fresh start for crypto users. 

A Controversial Rule That Sparked Industry Backlash

The SEC had planned to change the definition of a broker-dealer, which would have required crypto liquidity providers and automated market makers (AMMs) with over $50 million in capital to register with the agency. This move angered many in the community, especially from DeFi supporters, who argued that such a rule was unrealistic for platforms without a central authority. Since DeFi operates in a decentralized manner, enforcing compliance would have been nearly impossible, putting its future in the U.S. at risk.

Court Ruling Blocks the SEC’s Plan

Crypto trade groups, including the Blockchain Association and the Crypto Freedom Alliance of Texas, took the SEC to court, arguing that the agency had gone beyond its legal limits. In November, a Texas federal judge agreed, ruling that the SEC had overstepped its authority. This blocked the proposed rule, dealing a major setback to the agency’s regulatory efforts.

Though the SEC initially pushed back, it unexpectedly dropped its appeal on Feb. 19, officially ending the case. Blockchain Association CEO Kristin Smith called it a “complete and total victory,” saying the crypto industry could now move forward without fear of excessive regulations.

According to a crypto user, the SEC’s decision to drop its appeal is a clear rejection of regulatory overreach. The analyst highlighted how unelected officials attempted to expand their authority to suppress crypto innovation but were ultimately blocked by the courts and new leadership. DOGEai cheered this major victory for the industry, proving that pro-growth policies are on the way. 

Trump’s Crypto-Friendly Approach

The SEC’s retreat comes at a time of major leadership changes. Following former Chair Gary Gensler’s exit, Trump has reshaped the agency, appointing Mark Uyeda as acting chair while his nominee, Paul Atkins, awaits congressional approval. Under Uyeda, the SEC has already shown signs of easing its aggressive stance on crypto.

One of the agency’s biggest moves under new leadership is the formation of a dedicated Crypto Task Force, led by Commissioner hester peirce Known for her support of fair and clear regulations, Peirce’s task force is expected to reassess many of the enforcement actions taken against crypto firms under Gensler’s tenure.

With the SEC now stepping back from legal battles and reconsidering its approach, the crypto industry is hopeful that this marks the beginning of a more balanced regulatory framework.

Debashree Patra

Fun-loving and cheerful, a passionate blockchain and crypto writer who knows no boundary…connect if you share the same passion. With 10+ years of writing experience, I am a Crypto Journalist by chance, exploring, and learning all the dynamics of the sci-fi action-filled crypto world. Currently, focusing on cryptocurrency news and price data. With a passion for research and challenging my capabilities, I am slowly getting into the crypto arena to bring new insights every day.

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