SEC and CFTC Rules May Face Legal Challenges
Key Summary
The SEC and CFTC have issued pro-crypto rules, but their durability is being tested in court. A 2024 Supreme Court decision means agency rules can more easily be overturned by the courts, and a community bank group is suing the Office of the Comptroller of the Currency for exceeding its authority by allowing crypto firms to obtain national trust bank charters. Experts warn that shifting sands and vagueness in the law may lead to challenges to these rules.
Background
The SEC and CFTC have issued a raft of pro-crypto rules recently. But will the rules hold up in court, and can they be easily rolled back by the “anti-crypto army”?
Legal Opinion
Magazine spoke with Yuriy Brisov from D&A Partners to discuss the legal issues involved. Brisov explained that agencies like the SEC are supposed to create rules, not just interpret existing ones. He noted that the power to create rules is limited, and companies or damaged parties can challenge regulations in court if they find them burdensome or bizarre.
Chevron Decision
A 2024 Supreme Court decision overruled the Chevron precedent, which said that if the law is vague or there are uncertainties and ambiguities, the agency's interpretation should be used as the law. This means that the courts can now more easily overturn agency rules.
The durability of regulator rulemaking is currently being tested in court, with a community bank group suing the Office of the Comptroller of the Currency for exceeding its authority by allowing crypto firms to obtain national trust bank charters. Experts warn that shifting sands and vagueness in the law may lead to challenges to these rules.
Conclusion
The SEC and CFTC's pro-crypto rules are facing an uncertain future. While the agencies have the power to create rules, they must also be mindful of the limitations and potential challenges to their regulations.