A US Supreme Court case could change the regulation of the crypto industry.

It's no secret that Gary Gensler, head of the United States Securities and Exchange Commission (SEC), has issues with the current state of the crypto and blockchain industry.

But the US government isn't just about regulatory agencies. Some US lawmakers do not share Gensler's view and have pushed back on the SEC's crypto asset regulation.

1⃣ Providers of crypto asset investments/services may not comply with applicable laws, including federal securities laws. Investors in crypto asset securities should understand that they may be deprived of key information and other important protections related to their investment.

— Gary Gensler (@GaryGensler) January 8, 2024

Different emotions within the US government have left an uncertain and shaky landscape for crypto projects to be built in the United States.

Part of the problem is the ever-changing and undefined process by which the SEC determines what is and isn't a security, highlighted by the agency's use of the Hawaii test — a metric many in the crypto industry think is largely outdated.

However, the way the United States government creates laws is different from other countries.

The SEC has its own limits, but what are those limits, and how does anyone know if they've exceeded their authority?

Two cases before the Supreme Court of the United States (SCOTUS) could significantly limit such definitions regarding cryptocurrency, allowing the industry to grow again in America.

Cases pending on the docket include Loper vs. Raimondo and Relentless, Inc. vs US Department of Commerce.

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According to Scott's blog, the issue in both cases is clarifying how much US federal agencies use discretion and interpretation of the law rather than what Congress has clearly defined.

The Loper case illustrates the practical consequences of Chevron compliance, an interpretation of the long-standing Fisheries Conservation Act that requires fishing vessel owners to bear the costs of on-board inspectors. Critics argue that this is an arbitrary application of the rule, imposing unsustainable costs on small businesses that could drive them out of business.

In the year In a 1984 court case, Chevron vs. The Natural Resources Defense Council has set a precedent for Chevron deference, which will significantly affect many industries, including cryptocurrencies.

Chevron compliance

So what is the honor of Chevron? The US Congress is generally not an expert on any one subject, as it is a diverse group of people who spin and spin out of office.

To help create a more focused and effective process for enforcing laws, Congress has delegated law enforcement to administrative agencies.

These agencies are responsible for administering and enforcing laws passed through the legislative process.

But the Chevron case held that federal agencies can enforce a law unless the federal agency's actions to enforce the law are unreasonable and Congress has not directly enacted the law or is silent on that part of the law. Cornell Law School Legal Information Institute.

Chevron's deference allows for reasonable and reasonable interpretation by the agency Congress has delegated to administer the statute. However, many figures in the cryptocurrency space argue that the SEC's regulations on crypto are far from rational or reasonable.

The Crypto industry talks about the lack of proper regulation

Coinbase CEO Brian Armstrong has repeatedly talked about how regulations will drive the crypto industry offshore and how the US will eventually get “the right result” for crypto.

Eliminating or limiting Chevron's deference as a condition means that the US people can better influence their elected officials to create clearer laws affecting areas such as digital assets.

Because Congress hasn't really reached a consensus on digital assets, agencies like the SEC can use Chevron's deference for interpretation and enforcement as they see fit. Until Congress defines what classifications and under what circumstances digital assets are securities or commodities, as well as a long list of new issues based on the revolutionary nature of this asset class, the SEC could suddenly declare something a security.

Ripple's victory could have a lasting impact

The regulatory uncertainty in the US that Ripple's XRP (XRP) token is not safe to sell on a retail digital asset exchange in July 2023 is a significant milestone for the industry, setting some precedent going forward.

Now before the Supreme Court is Loper vs. Relentless, Inc. He opposes the use of Chevron's delegation by federal agencies.

These issues could remove or limit the power of the SEC, forcing the agency to follow the direction of the US Congress on how cryptocurrency, blockchain and the entire industry will be treated in the near future.

Watch the full Ripple vs. Jeremy Hogan, an attorney who worked on the SEC case on his YouTube channel Legal Brief, told Cointelegraph:

“The decision in the Loper case, if it overturns Chevron's deference, comes at a pivotal and critical time in major litigation involving digital assets and the SEC.”

When asked how the previous Ripple court decision and the current Coinbase case will affect the decision of this case, Hogan said: “Primary litigation, the Ripple case is the most distant, but the Coinbase case could be followed, very quickly.” I am heading for appellate review. The Supreme Court may hand its appeal decision to Ripple or Coinbase in favor of Looper.

However, while other industries may see immediate changes to their practices under federal agencies like the SEC if Looper revokes or limits Chevron's compliance, the blockchain and cryptocurrency industries may see limited impact.

As for how the ruling will play a role in crypto issues, Hogan replied: “[That] A must see. This is because the SEC mostly relies on the “Howie” test to regulate digital assets, not the specific rules it has set for the position, although some argue that it has not set any. It will absolutely rule.

While the cases now before SCOTUS are not directly related to cryptocurrencies, the crypto industry was mentioned in opening statements. Cointelegraph asked if this meant the court would have to settle the case. Hogan said, “If Looper's buyer openly addresses the crypto space, even in passing, this will provide Coinbase with invaluable ammo, especially to argue that the SEC is testing its regulations.

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“And it's not easy to imagine that the Supreme Court will directly address or cite it in its decision because Looper's attorney cited crypto as an example of agency overlap during oral arguments. If the Supreme Court picks up on that example and uses it in its decision, crypto exchanges and companies fighting the SEC in court will be very It provides an important piece of the puzzle,” he concluded.

Lessons for the cryptocurrency industry

As the blockchain and crypto industry matures, it will inevitably interact with other sectors and their regulations. Crypto companies pushing the US government for a better regulatory environment can find angles on the issues mentioned here to help their case.

Not everything has gone as far as the Supreme Court to protect Bitcoin (BTC) and other cryptocurrencies, as coded speech is speech, and speech is an inalienable right expressly enshrined in the US Bill of Rights. Every case that comes before bodies like SCOTUS has the potential to impact the blockchain space, either positively or negatively.

Staying vigilant and clear about how the law's interpretations are playing out could mean the difference between the US thriving or being left behind as blockchain, decentralized ledger technology and related industries advance.