The SEC’s decision to drop its dealer rule lawsuit appeal marks a major victory for the crypto industry, ending a legal battle over regulatory overreach and signaling change

The U.S. Securities and Exchange Commission (SEC) has voluntarily dropped its appeal in the lawsuit challenging the dealer rule, securing a decisive

The U.S. Securities and Exchange Commission (SEC) has dropped its appeal in the lawsuit challenging the dealer rule, securing a decisive victory for the Blockchain Association (BA), the Crypto Freedom Alliance of Texas (CFAT), and the broader cryptocurrency industry.

A motion to dismiss was filed on Feb. 19 in the U.S. Court of Appeals for the Fifth Circuit, concluding the legal battle initiated by BA and CFAT in April 2024. The organizations contended that the SEC overstepped its regulatory authority.

The motion, signed by SEC Senior Special Counsel Samuel B. Goldstein, states that both parties agreed to bear their own costs in the matter.

The decision marks a turning point for the SEC under its new leadership. Former SEC Chair Gary Gensler's tenure was characterized by an aggressive stance against crypto, which culminated in a series of lawsuits and regulatory actions targeting the industry. However, with Gensler's departure and the appointment of Mark T. Uyeda as Acting SEC Chairman, a more crypto-friendly approach seems to be emerging from the agency.

Upon assuming the role, Uyeda established a Crypto Task Force headed by Commissioner Hester Peirce, who is known for her pro-crypto stance within the SEC. This task force aims to create a clear regulatory framework for digital assets, shifting away from the previous enforcement-centric approach.

The initiative aligns with President Donald Trump's efforts to establish a crypto-friendly environment in the United States. As part of this strategy, the SEC has paused ongoing litigation against major crypto exchanges, including Binance and Coinbase, to reassess regulatory strategies under the new task force's guidance.

After the SEC voluntarily dropped its appeal in the dealer rule lawsuit, BA CEO Kristin Smith praised the decision and highlighted the importance of industry dialogue with the SEC.

“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.

“We first brought our lawsuit against the SEC to challenge the agency's unlawful power grab, which sought to unilaterally redefine the boundaries of its statutory authority. With new leadership at the agency leading to today's final dismissal, we're looking forward to productive conversations between industry and the SEC moving forward – and a brighter future for digital assets in the United States.”

The BA and CFAT had argued that the SEC's approach in enforcing the dealer rule amounted to arbitrary rulemaking that unfairly targeted the digital asset sector. Their lawsuit sought to vacate the SEC's interpretation of the dealer rule and prevent its further application in the crypto industry.

Marisa Coppel, Head of Legal at BA, also commented on the decision and emphasized the role of litigation in defending the industry.

“Litigation is a critical tool Blockchain Association has to defend the industry against regulatory overreach. We were proud to file this lawsuit on behalf of our members and the entire industry,” Coppel said.

“Today, we celebrate this resounding victory for the innovators, entrepreneurs, and builders across America.”