Morrison Cohen Files Amicus Brief Outlining Concerns with SEC’s New Rule Expanding the Definition of “Dealer” Under the Exchange Act
On May 24, 2024, Morrison Cohen, on behalf of client Paradigm Operations LP, filed a proposed amicus brief in a litigation brought by the Crypto Freedom Alliance of Texas and Blockchain Association in the U.S. District Court for the Northern District of Texas against the Securities Exchange Commission and Chairman Gary Gensler, challenging the SEC’s recent “Dealer Rule.” On May 28, 2024, the Court permitted the amicus to be filed.
The amicus brief details how the Dealer Rule’s critical ambiguities might improperly sweep digital assets industry participants – for example, those who stake cryptocurrency tokens to liquidity pools – into the Exchange Act’s definition of “dealer.” The amicus further explains that “even if an entity determines that it might be a ‘dealer’ based on the Dealer Rule, registering as a dealer is impossibly unworkable for digital assets market participants,” and “all that money and time would be expended on a registration application that would almost certainly be denied.”
The amicus cautions of “the real-world chilling effect that the Dealer Rule will have on innovation in an exciting and transformative developing sector that is likely to be – unless squashed by overbearing regulation – the future of finance.”
Jason Gottlieb, Michael Mix and Emma McGrath drafted the amicus brief.
Contacts
- Jason P. Gottlieb Partner & Chair, Digital Assets; Chair, White Collar and Regulatory Enforcement
- jgottlieb@morrisoncohen.com
- Michael Mix Partner
- mmix@morrisoncohen.com
- Emma E. McGrath Associate
- emcgrath@morrisoncohen.com
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Our Digital Assets Group represents some of the largest and most significant names in the sector, drawing upon our depth of experience and comprehensive understanding of cryptocurrency, DeFi, DAOs and NFTs.
