Yuriy Brisov of D&A Partners argues that agencies must justify reversals of crypto rules and consider businesses built around existing interpretations. The SEC and CFTC moved immediately to issue crypto market rules after the Senate's failed CLARITY cloture vote. SEC Chair Paul Atkins said the agency was releasing rules because Congress had not acted.
The SEC unveiled a five-year exemption permitting the issuing and trading of stock tokens two days after the vote. OXK has since teamed up with ICE to launch trading in 63 NYSE-listed stocks. Securitize launched 12 Securitize Stocks, including Apple, Nvidia and Microsoft. The SEC issued guidance clarifying that a crypto token does not become a security merely because a project buys back the project's tokens. The SEC also stated that liquid staking tokens are not securities. The SEC proposed new rules for the custody of crypto assets.
The CFTC moved to exempt some crypto software providers from registration requirements. The CFTC proposed a new "crypto asset market" registration category. The CFTC intends to allow registered exchanges to offer leveraged trading.
Some industry participants are concerned that the rules could be unstable. TD Cowen cautioned that agency rules "are the easiest to rescind". Trump-appointed commissioners removed the policies of the Gary Gensler era. A community bank group is suing the Office of the Comptroller of the Currency for allegedly exceeding the office's authority by allowing crypto firms to obtain national trust bank charters.
Brisov said the Exchange Act of 1934 gives the SEC authority to create rules explaining how laws apply. Brisov argued that the legislative framework allows the SEC to accommodate new technology, including blockchain tokens. Brisov said a new commission can interpret rules differently from a previous commission but must provide reasons within the existing body of law. Brisov argued that the commission under Gensler failed to apply existing rules successfully to tokens because ambiguity remained and many companies left the US market permanently. Brisov said companies or other harmed parties can challenge regulations that impose unbearable economic burdens or damage the market. Brisov cited Business Roundtable v. SEC, a successful business challenge to SEC proxy-voting rules in 2011.
Brisov said the 1984 Chevron precedent directed courts to defer to agency interpretations when statutes were ambiguous. Brisov said the Supreme Court's Loper Bright decision overturned Chevron in June 2024, allowing courts to reach independent conclusions, including when applying Howey. Brisov said a traditional broker-dealer or investment-market participant challenging a rule must demonstrate harm, inadequate research and burdens on business and the US market. Brisov said a court can overturn a regulation if the challenger proves damages and insufficient research. Brisov said Atkins and the SEC appeared to have consulted extensively with crypto firms and venture capital investors rather than developing the rules in a day.
Brisov said an agency considering reversal must take account of businesses that invested in infrastructure under the existing rules. Brisov argued that an agency cannot simply reverse a regulation if the regulation offers potential growth and benefits for the US market. Brisov said agencies and courts must follow understandable, transparent reasoning through the framework of issue, rule, analysis and conclusion, known as IRAC. Brisov said a reversal requires an explanation, economic analysis and research demonstrating why the existing approach is insufficient. Brisov said Atkins could not abandon Howey merely because Atkins disliked the test. Brisov said Atkins repeatedly acknowledges that Howey remains valid while explaining why the SEC can interpret the test differently in particular cases.
Brisov said a business following an SEC frequently asked questions document would probably be in the clear if knowledgeable people prepared the guidance. However, Brisov said such guidance is not legislation and has no authority, even for staff. Brisov described frequently asked questions as staff explanations of how to understand and apply existing rules, rather than changes to the rules. The SEC rewrote the token-buyback guidance after a week because a16z's legal counsel said the guidance left a major loophole. Brisov said frequent revisions are appropriate because frequently asked questions are neither regulation nor legislation and can change every week.
Legal Analysis on SEC and CFTC Crypto Rules Reversal
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Summary
Yuriy Brisov of D&A Partners says the SEC and CFTC must justify any reversal of crypto rules, especially as liquidity and crypto markets remain sensitive to regulatory shifts. The agencies acted fast after the Senate’s failed CLARITY cloture vote, with the SEC offering a five-year exemption for stock tokens and the CFTC proposing a new registration category for crypto assets. Industry players worry about instability, given recent rollbacks of Gensler-era policies. Brisov cited the 1984 Chevron precedent and the Loper Bright decision, which empower courts to review agency actions. He stressed the need for clear reasoning and economic analysis before any changes. The CFT (Countering the Financing of Terrorism) framework also remains a key regulatory touchpoint in the evolving landscape.
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