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The recent Supreme Court decision significantly strengthens the argument that Congress, not federal agencies, should decide on the regulation of Web3. This shift stems from the United States Supreme Court’s ruling in Loper Bright vs. Raimondo, which is poised to have a profound impact on the cryptocurrency industry.
The 6-3 decision in Loper Bright vs. Raimondo marks a pivotal moment by nullifying the precedent set by Chevron USA Inc. vs. Natural Resources Defense Council in 1984. With this ruling, US courts are no longer required to defer to federal agencies when interpreting ambiguous statutes. “Chevron is overruled,” the court declared on June 28.
This decision affects more than just technology; it has broad implications for finance, healthcare, the environment, and beyond. Jim Lundy, a securities enforcement and litigation partner at Foley & Lardner, emphasized, “The Supreme Court did the appropriate thing with this ruling because the Chevron deference had started to stretch too far for certain agencies.”
Joshua Simmons, partner at Wiley Rein, described the ruling as a “game changer” for the crypto and blockchain sectors. The decision removes the deference previously afforded to agencies, potentially leading to more companies challenging agency actions and leveling the playing field.
Joanna Wasick, a litigation partner at BakerHostetler, highlighted that the ruling underlines the overreach of the SEC. She noted that arguments similar to those successful in Loper Bright could influence future crypto-related cases.
The Supreme Court’s decision could prompt Congress to pass crypto reform legislation and embolden crypto and blockchain companies to pursue legal challenges. This ruling supports ongoing industry challenges, such as Coinbase vs. SEC and Consensys’ struggles with the SEC. Peter Van Valkenburgh of Coin Center noted that without Chevron, judges need not defer to the SEC’s interpretation of what constitutes a ‘broker.’
In Europe, where the Markets in Crypto-Assets Regulation (MiCA) framework has been implemented, the Loper Bright ruling is seen as potentially reducing regulatory barriers by limiting the SEC’s broad interpretive powers. This could encourage innovation in digital asset tokenization and lead to a more predictable regulatory landscape.
While the ruling does not eliminate the rulemaking capabilities and oversight of regulatory agencies, it removes the Chevron deference in cases of ambiguous rulemaking. This is particularly relevant as policymakers at the SEC and CFTC draft rules for the cryptocurrency and blockchain industries.
The full impact of Loper Bright will unfold over time as more test cases and litigation emerge. The industry is advised to be proactive in navigating these changes. Lundy concluded that this ruling will inspire new strategies to challenge SEC and CFTC rulemakings within the cryptocurrency and blockchain sectors.
In summary, the Supreme Court’s decision in Loper Bright vs. Raimondo marks a significant shift in the regulatory landscape for US crypto firms, potentially leading to more balanced and clear-cut interpretations of regulatory authority.