Discover how the U.S. Supreme Court’s recent decision in Loper Bright vs. Raimondo is shaking up the cryptocurrency landscape, challenging the power of federal agencies, and paving the way for more industry-friendly regulations.
Elon Musk’s social media platform, X, is facing potential fines of up to $200 million for alleged violations of the Digital Services Act (DSA). However, another significant legal development is making waves in the cryptocurrency industry — the U.S. Supreme Court’s decision in Loper Bright vs. Raimondo. This ruling has the potential to profoundly reshape the regulatory landscape for crypto.
The Supreme Court’s 6-3 decision overturned the long-standing Chevron deference, a principle established in 1984 that required courts to defer to federal agencies' interpretations of ambiguous statutes. On June 28, the court declared, “Chevron is overruled.” This ruling alters the power dynamics between the judicial and executive branches, especially concerning regulatory agencies.
Broad Implications Beyond Crypto
Jim Lundy, a securities enforcement and litigation partner at Foley & Lardner, remarked that the decision impacts not just technology, but also finance, healthcare, and the environment. “The Supreme Court did the appropriate thing with this ruling because the Chevron deference had started to stretch too far for certain agencies,” Lundy told Cointelegraph.
Joshua Simmons, a partner at Wiley Rein and adjunct professor at the University of Virginia School of Law, emphasized that Loper Bright’s impact will be “enormous” for the crypto and blockchain sectors. According to Simmons, the ruling levels the playing field, allowing more companies to challenge agency decisions without the previous deference agencies enjoyed.
Challenges for the SEC
Joanna Wasick, a litigation partner at BakerHostetler, highlighted that during oral arguments, Loper Bright’s attorney pointed to the SEC’s overreach in the crypto sector as an example. While crypto was not the issue at hand in Loper Bright, the arguments made could influence future cases involving the SEC.
Simmons suggested that the ruling could push Congress to pass crypto reform legislation and encourage more lawsuits from crypto and blockchain companies. Peter Van Valkenburgh from Coin Center noted that without Chevron deference, judges could independently interpret laws affecting the industry, such as defining a “broker” in cases like SEC vs. Consensys.
International Perspective
In Europe, Annabelle Rau, a lawyer at McDermott Will & Emery in Germany, indicated that Loper Bright might reduce regulatory barriers, potentially mirroring Europe’s MiCA framework. MiCA aims to balance innovation with oversight, facilitating digital asset tokenization and crypto services. A similar regulatory environment in the U.S. could spur innovation through consistent judicial rulings.
Is Loper Bright a Game-Changer?
Joanna Wasick believes that while Loper Bright changes the game for U.S. crypto firms by removing SEC’s interpretive advantage, it doesn’t eliminate the SEC’s oversight or rulemaking capabilities. Ian Cain, co-founder of Qubic Labs and U.S. Senate candidate, suggested the ruling could increase pressure on Congress to pass comprehensive crypto legislation, shifting regulation from federal agencies to a clearer legislative framework.
Industry Reactions and Future Challenges
Kathryn Haun hailed the ruling as “the most significant court case for technology policy in the U.S. in years.” The ruling’s effect on industries like AI, biotech, and clean energy is substantial. However, Lundy cautioned that the ruling doesn’t eliminate agency rulemaking but limits Chevron deference when the rulemaking is ambiguous. Policymakers at the SEC and CFTC must be mindful of this decision when crafting new rules for the crypto industry.
Lundy and Simmons agreed that the full impact of Loper Bright will unfold over time, with more test cases and litigation required. The industry must remain proactive, as the ruling presents new opportunities and challenges for defending against agency overreach.
In summary, the Supreme Court’s decision in Loper Bright vs. Raimondo represents a pivotal moment for the crypto industry. By curtailing federal agencies' interpretive powers, the ruling opens the door for more balanced regulatory scrutiny and potentially more favorable outcomes for crypto and blockchain companies.
(ANDREW SINGER, COINTELEGRAPH, 2024)