Recent actions by the U.S. Securities and Exchange Commission (SEC) indicate a possible change in its approach to regulating the cryptocurrency market and decentralized finance (DeFi). The regulator filed a motion to withdraw its appeal of a court ruling limiting its authority over cryptocurrency users and DeFi platforms. This event could have a significant impact on the future regulation of the industry.

The essence of the matter

In 2024, the SEC proposed changes to the definition of 'dealer' (dealer rule), under which market participants with assets over $50 million were required to register as dealers. This applied to both centralized cryptocurrency platforms and some DeFi services, which drew criticism from the industry.

Major cryptocurrency organizations, such as the Blockchain Association and the Crypto Freedom Alliance of Texas, filed a lawsuit against the SEC, claiming that such changes violate U.S. law and hinder innovation. In November 2024, a federal court in Texas ruled against the SEC, stating that the regulator had exceeded its authority.

The SEC filed an appeal but has now unexpectedly decided to withdraw it. This may indicate that the commission is either reevaluating its methods of regulating the crypto industry or does not want to engage in protracted litigation that could set a precedent against its other initiatives.

Conclusions and implications

  1. A signal of a possible change in the SEC's course – after aggressive policies under Gary Gensler, the commission may begin to soften its regulation of the crypto industry.

  2. Increased confidence among crypto investors – if the SEC truly backs away from strict restrictions, this could have a positive effect on cryptocurrency prices.

  3. An example for other countries – the SEC's actions may influence regulatory strategies in the EU, Asia, and other regions.

This step could set an important precedent, showing that the cryptocurrency community is capable of effectively defending its interests. However, despite this victory, the industry must be prepared for new challenges from regulators.

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