A trifecta of recent decisions could hobble the SEC and help crypto banks win key rights.
As the biggest names in crypto remain embroiled in years-long legal battles with federal regulators, the Supreme Court has delivered them a gift: three landmark decisions weakening the powers of those same federal agencies. That, plus the possibility of a crypto-friendly second Trump Administration and movement in Congress on pro-crypto legislation, are providing tailwinds for the industry.
“By Emily Mason, Forbes Staff
First, on June 27th, in a 6-3 decision, the conservative majority of the Supreme Court decided in Securities and Exchange Commission v. Jarkesy that when the SEC seeks to fine organizations for fraud without pursuing criminal charges, it must do so in federal courts instead of relying on its own administrative law judges. Under Chairman Gary Gensler, the SEC has made cracking down on the crypto industry a priority. According to an analysis by Cornerstone Research, the SEC brought a record 46 enforcement actions against digital asset firms in 2023, with 20 of them (up from six in 2022), resolved as administrative proceedings. Most of the litigations (20 of 26) alleged fraud, but so did six of the crypto administrative cases, according to the analysis.
The new limit on administrative law judges doesn’t directly affect SEC cases against such high-profile players as asset exchanges Coinbase and Kraken, developer of XRP blockchain Ripple and decentralized protocol Uniswap—they’re already in federal court. But it does cramp the SEC’s enforcement resources and style.
A day later, in Loper Bright Enterprises v. Raimondo, the same six-to-three Supreme Court majority overturned “Chevron deference,” a 40-year-old legal precedent holding that courts should defer to federal agencies’ reasonable interpretations of ambiguous language in the laws Congress has passed. In its new ruling, the court held that the Administrative Procedure Act requires judges themselves to independently interpret the meaning of ambiguous wording, rather than deferring to agency officials.
Finally, on July 1, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System, the court’s conservatives extended the time frame during which businesses can challenge an agency’s rules, opening up the door for decades-old regulations to be called into question by new businesses. And what are crypto businesses, if not new?
Beyond the impact on any single case, the decisions, taken together, sent an unmistakable message: The legal tide has turned against the regulators, including those intent on holding crypto back.
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