Regulation
Supreme Court overturns Chevron deference, reshaping cryptocurrency policy
Photo by Brad Weaver on Unsplash.
Key points
- The Supreme Court’s overturning of the Chevron ruling limits the SEC’s interpretive authority over cryptocurrencies.
- The decision requires judicial resolution of statutory ambiguities, which impact broader regulatory practices.
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The U.S. Supreme Court’s 6-3 decision to overturn the Chevron doctrine marks a significant shift in federal regulatory power, with potentially far-reaching implications for crypto policy.
The ruling, handed down by Chief Justice John Roberts, dismantles a 40-year-old legal precedent requiring courts to defer to federal agencies’ interpretations of ambiguous laws, with a potentially substantial impact on the SEC’s approach to policy on cryptocurrencies.
Under the previous Chevron doctrine, agencies like the SEC had considerable leeway in interpreting and enforcing laws in emerging industries like cryptocurrencies. The new ruling requires courts to exercise independent judgment in assessing whether agencies acted within their statutory authority.
For the cryptocurrency industry, which has faced regulatory uncertainty and aggressive enforcement from the SEC under Chairman Gary Gensler, this decision could prove beneficial. It would mean that agencies are now required to pay more attention to their regulatory reach, especially in emerging technologies like cryptocurrency and artificial intelligence.
By extension, the ruling could also impact ongoing legal fights between the SEC and major cryptocurrency firms Coinbase, Ripple, BinanceAND The Kraken. These companies argue that the SEC is overstepping its authority in classifying certain digital assets as securities.
Economist Timothy Peterson sees the decision as a victory for Bitcoin, arguing that it will prevent the SEC from acting as a rote expert on cryptocurrencies. This change could lead to closer scrutiny of the SEC’s regulatory stance and potentially fairer regulations.
“[The] The “Chevron” doctrine meant that the regulatory agency was automatically the subject matter expert. Now I’m not. #SCOTUS overturning Chevron’s deference limits the SEC’s unilateral interpretative power towards Bitcoin. All those ‘staff opinions’ that said “such and such is a security”? Gone,” Peterson said on the X.
Critics of the Chevron doctrine, mainly conservatives, have long argued that it gives too much power to unelected regulators. However, dissenting Justice Elena Kagan warned of a potential large-scale disruption of federal regulation.
The move is in line with recent sentiment from figures such as Balaji Srinivasan, who say Chevron’s turnaround could accelerate innovation in highly regulated industries, including cryptocurrencies.
While the full impact of this ruling on cryptocurrency regulation remains to be seen, it could potentially lead to more balanced regulatory approaches and encourage Congress to take explicit action to clarify existing statutory ambiguities.
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