US Courts Step In To Drive The Development Of A Legal Framework For Crypto
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The crypto industry is seeing the development of a legal framework under the Trump administration, which is expected to lead to a dramatic transformation. However, one unusual thing is that it is not driven by lawmakers, but by the judiciary.
The US SEC still has some voids that were created by the arrival of the new administration that have not yet been filled, and so, the courts are closing the gaps with interpretation. Lacking a combined oversight by the SEC or any comprehensive legislation to guide their decision-making, the judges’ rulings are starting to shape the future of crypto regulation in the nation.
How Courts Help Establish Crypto Laws
During Trump’s previous term, the SEC’s operations have been marked by uneven enforcement and inconsistency. In spite of high-profile enforcement proceedings against firms like Ripple Labs in 2020, there has been no coherent framework for how digital assets would be regulated, or even classified. As a result, neither crypto businesses nor investors knew whether some projects should be considered securities.
Then came the Biden administration, and while the SEC under Gary Gensler’s leadership radiated greater boldness, it still failed to bring transparent legislation that would enable the courts to do their jobs, causing them to bridge the regulatory void on their own.
This led to a series of landmark decisions throughout the last year, with the Ripple case, in particular, bringing a partial victory to the crypto sector after a federal judge decided that sales of XRP on secondary markets were not securities transactions. The SEC did initially appeal the ruling, only to eventually drop its case against Ripple once the Trump administration returned, this time much more crypto-friendly.
Another case saw the judge reject the SEC’s attempt to block Grayscale from bringing forward converting its BTC trust into a spot ETF. The rejection deeply affected the agency’s broader crypto policy path moving forward. Many other small rulings resulted in deciding the dos and don’ts of the crypto industry moving forward, all serving as signs that the judiciary is taking a more active role in interpreting crypto law while federal agencies failed to react.
