Potential Supreme Court case in the US poses the possibility of altering regulation within the crypto industry.

Gary Gensler, the head of the United States Securities and Exchange Commission (SEC), has been vocal about his concerns regarding the crypto and blockchain industry. However, not all lawmakers in the U.S. government share Gensler’s views, leading to a conflicting landscape for crypto projects in the country. One of the challenges faced by the industry is the SEC’s use of the outdated Howey test to determine what qualifies as a security.
Unlike many other countries, the process of creating laws in the U.S. is different. The SEC has certain limitations, but it is unclear when it has overstepped its powers. Two cases currently before the Supreme Court of the United States (SCOTUS), Loper vs. Raimondo and Relentless, Inc. vs. the U.S. Dept of Commerce, have the potential to redefine the extent of federal agencies’ discretion and interpretation of the law, which could have significant implications for the crypto industry.
The Chevron deference, established in the 1984 court case Chevron vs. Natural Resources Defense Council, allows federal agencies to enforce laws as long as their actions are not unreasonable and Congress has not directly addressed the issue. However, many in the crypto industry argue that the SEC’s regulations have been irrational and unreasonable.
The lack of clear regulations has driven the crypto industry offshore, according to Coinbase CEO Brian Armstrong, who believes that the U.S. will eventually find the right regulatory outcome for crypto. Limiting or removing the Chevron deference as a precedent would enable the U.S. citizens to influence their elected officials in creating clearer laws for digital assets.
The ruling in the Ripple case, where XRP was deemed not a security when sold on retail digital asset exchanges, provided some precedent for the industry. The ongoing Loper vs. Relentless, Inc. case challenges the use of the Chevron deference by federal agencies and could restrict the SEC’s power, forcing it to align more closely with Congress’s direction on crypto and blockchain regulation.
Jeremy Hogan, an attorney who has been documenting the Ripple vs. SEC case, believes that a favorable ruling in the Loper case could benefit Ripple or Coinbase in their respective cases. However, the impact of these cases on the crypto industry remains uncertain, as the SEC primarily relies on the Howey test rather than specific rules for digital assets.
While the current SCOTUS cases are not directly related to cryptocurrencies, the mention of the crypto industry in the opening remarks suggests that it may be addressed. If the ruling in the Loper case explicitly addresses the crypto space, it could provide valuable ammunition for Coinbase to argue against SEC overreach.
As the blockchain and crypto industry continues to mature, it will intersect with other sectors and their regulations. Crypto firms can use cases like those mentioned here to advocate for a better regulatory environment. Paying attention to how the law is interpreted and being proactive in shaping regulations is crucial for the industry’s growth in the U.S.