- The U.S. crypto regulatory landscape remains shrouded in uncertainty.
- Agencies like the SEC have chosen to regulate the crypto space through enforcement.
- The Supreme Court is considering a ruling offering market participants some respite.
Crypto regulations remain a divisive topic worldwide, with several jurisdictions employing different approaches to regulate the nascent market.
In the United States, regulators like the Securities and Exchange Commission have chosen to assert their jurisdiction over crypto markets through enforcement actions, as Congress has yet to create a rule book to guide the space. This approach has been decried by many for creating further confusion and potentially driving business abroad.
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Some now speculate that the regime of regulation by enforcement may be set to end as the U.S. Supreme Court contemplates what could be a landmark ruling.
The U.S. Supreme Court Could Get Rid of the Chevron Deference Doctrine
On Monday, April 1, the Wall Street Journal reported that the U.S. Supreme Court would evaluate whether or not courts should continue to abide by the Chevron Deference doctrine.
According to the doctrine, the courts should submit to a government agency’s interpretation of the law in cases where the law is unclear. The Chevron deference doctrine originates from a 1984 case between Chevron and the Natural Resources Defense Council.
With the Supreme Court now set to reevaluate the doctrine, some believe the crypto industry is about to be saved from the SEC’s barrage of enforcement actions.
Could This Spell the End of the SEC’s Crypto Enforcement Campaign?
George Mason University Associate Law Professor and former SEC Investor Advisory Committee member J.W. Verret told DailyCoin that doing away with the Chevron deference doctrine could have great significance for the crypto markets but perhaps not in the way people expect.
The law professor said repealing the doctrine would better equip the crypto industry to fight three SEC proposed rules. These include the SEC’s proposed “exchange” definition change, the proposed broker-dealer rule, and the custody rule, all of which industry participants have raised several concerns about.
Verret, however, does not believe that deprecating the Chevron deference doctrine would impact SEC enforcement actions, a view that ConsenSys Lawyer Bill Hughes also supported.
“For Chevron to apply a statute has to be ambiguous. And the securities act isn’t when you engage in standard statutory interpretation,” Hughes told DailyCoin.
Verret expressed the belief that the effect on SEC enforcement, if any, would be indirect. The lawyer explained that weakening the Chevron deference doctrine strengthens the major questions doctrine. The latter holds that Congress does not delegate significant political and economic issues to the interpretation of executive agencies.
The lawyer argued that crypto companies might choose to use this as a defense in the future.
SEC Chair Gary Gensler maintains that most cryptocurrencies are securities, urging firms to “come in and register,” though industry participants say there is no clear path to doing so. Under his leadership, the agency has launched several enforcement actions against crypto companies, including Gemini and Kraken.
On the Flipside
- The Supreme Court is yet to decide on the matter.
Why You Should Care
The Chevron deference doctrine is a longstanding principle in the U.S. However, many believe that weakening or overturning this principle would significantly reduce overreach from government agencies in several industries, including crypto.
To learn more about the SEC’s stance on crypto, read this:
SEC Chair Gensler Urges Crypto Exchanges to Comply: Summary Rundown of Testimony
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