The Supreme Court of the United States (SCOTUS) has made two public opinions that will have long-standing implications for the US security markets as it will limit the say of the US Securities and Exchange Commission (SEC) about matters concerning the crypto market.
In the case of SEC Vs. Jarksey, the majority opinion was that the trial for a securities fraud case involving the SEC should be conducted under a trial jury rather than posting the case for adjudication by a single administrative law judge.
This opinion, made on June 27, implies that fraud in the securities market is as serious as any other criminal offense and should be tried in court like other criminal cases.
The court’s opinion, which was made on June 28, in the case titled Loper Bright Enterprises vs. Raimondo was that the 1984 ruling about the doctrine of Chevron Deference was to be revoked by the court.
This doctrine gave the investigative agency the power to interpret laws. After this ruling, federal agencies like the SEC will not be able to analyze the laws and make their own decisions; rather, every interpretation should be made by the judges of the federal court, like any other type of case.
What are the Consequences of this Ruling on the Power of the SEC over the Crypto Market?
The latest opinions made by the SCOTUS will have a negative impact on the supremacy of the US Securities and Exchange Commission (SEC) over rulings concerning the crypto market.
The CEO of the Crypto Council for Innovation, Sheila Warren, believes that if federal courts issue rulings pertaining to the cryptocurrency market, the SEC’s authority as the ultimate decision-making body will be lessened.
The Supreme Court ruling is a clear indication that will upset the overriding power of the SEC on the crypto market, which the crypto enthusiasts saw as the main deterrent to the market’s growth.
What are the Criticisms against these Rulings?
Even though these rulings were welcomed by a fraction of the market, there have also been several criticisms against the rulings, according to Justice Sonia Sotomayor, who had a difference of opinion in the SEC Vs. Jarksey case, this ruling will result in grabbing the power allotted to various agencies and concentrating it in the hands of the judiciary.
Justice Elena Kagan, who wrote her dissent on the Loper Bright Enterprises v. Raimondo case said that the settled law of the state will be overturned by this ruling.
This ruling will require the court to make final decisions on any discord about the interpretation of complex acts of major laws, which will only increase the burden of the judiciary.
Consequently, the decision-making process will become more time-consuming and laborious. Wealthy businessmen can now contest the rulings against their interests in the higher courts, while ordinary people may have to bear the brunt of these decisions.
The abrupt ending of the Chevron Deference, the 40-year-old legal procedure, is also viewed by many as a hasty decision. With the Chevron Deference, the concerned federal agencies could interpret the laws using their expertise and tailor their responses to individual cases, but with the present ruling, the legal struggle of the common people will take an upend.
How will this Ruling affect the SEC case against Consensys?
The immediate consequence of the Supreme Court’s opinions will apply to the SEC’s case against Consensys, the parent company of MetaMask.
As per the accusations by the SEC, Consensys is currently running as an unregistered broker selling securities under the Metamask swaps.
The case is relevant in light of accusations that the company has collected over $250 million as fees for unregistered brokering services.
If the current court rulings come into effect, Consensys can contest the SEC case in the federal court and collect a favorable ruling against the injunctions and penalties initiated against them.
The Bottom Line
The new opinions by the SCOTUS are indeed a game changer in the US crypto market as they will undermine the SEC’s supremacy over the rule-making in the cryptocurrency market.
While it may loosen the grip of the concerned agency in making laws and regulations, the associated lag in the decision-making process can be a deterrent to the fast execution of laws.
