Texas crypto trade bodies to drag the SEC to court

A BRACE of cryptocurrency trade organisations have sued the US Securities and Exchange Commission over the authority's new interpretation of securities.

A lawsuit filed by the Crypto Freedom Alliance of Texas and the Blockchain Association has been registered with the federal court of Fort Worth in Texas which aims to put a block on the SEC's new guidelines on what it rules to be a 'dealer'.

The bodies argue the SEC has overstretched its jurisdiction into grey areas with a rule that flies in the face of the Securities Exchange Act of 1934.

The regulatory authority brought the rule in earlier this year in an effort to enforce tighter risk management controls on proprietary traders it deems to be acting as "critical sources" of liquidity in the Treasury market.

But in papers handed over in Fort Worth today, the crypto organisations stated the rule "while nominally aimed at participants in traditional financial markets, threatens to bulldoze these innovations and potentially much of the burgeoning digital assets industry".

SEC senior figures are accused of twisting the 90-year-old act to include dealers who would have previously fallen outside of effectively providing market liquidity, describing the move as an "amorphous standard" that affects many groups within the crypto industry.

Responding to today's filing, a spokesperson for the SEC said it "undertakes rulemaking consistent with its authorities and laws governing the administrative process and will vigorously defend the final dealer rules in court".