The Supreme Court's recent decisions have significantly weakened the Securities and Exchange Commission's regulatory power over cryptocurrencies. Two key rulings in June and July have reshaped the landscape for crypto startups. And that is an important decision, no one is talking about for some reason.
The first case, Loper Bright Enterprises v. Raimondo, ended the Chevron doctrine. This doctrine had previously given federal agencies broad interpretive powers over ambiguous statutes. The court's decision now requires agencies to defend their interpretations in court like any other party.
The crypto industry has long grappled with regulatory uncertainty.
Multiple agencies, including the SEC, have attempted to extend their reach into this evolving sector. This has created a challenging environment for startups, particularly in decentralized finance (DeFi).
DeFi startups face a complex regulatory landscape. "While DeFi could radically improve financial access for the unbanked and transform our financial system, regulators have no idea how to classify DeFi services," industry experts note. This uncertainty has hindered compliant operations.
Despite these obstacles, the sector has continued to innovate. The growth has occurred in spite of regulatory headwinds.
The Loper Bright decision marks a significant shift. Courts are no longer bound by agency interpretations. Federal agencies must now convince courts of their correctness, just like any other litigant.
A second ruling, Corner Post Inc. v. Board of Governors of the Federal Reserve System, further bolstered startups' position. It clarified when the six-year statute of limitations for challenging regulations begins.
Previously, this window started when a rule was published. The new interpretation allows challenges to begin when a company starts operations affected by the rule. This opens the door for newer entities to contest long-standing regulations.
These combined decisions create a more favorable environment for regulatory challenges. Crypto startups now have powerful tools to push back against "unwarranted regulatory creep," as one analyst put it.
The full impact of these rulings remains to be seen, and that is not an understatement, no even a bit.