Can the SEC and CFTC’s pro-crypto rules be overturned? Legal opinion

In the wake of the failed CLARITY cloture vote in the Senate, the SEC and CFTC immediately moved to issue their own rules for crypto markets. 

Two days after the vote, the SEC unveiled a five-year exemption that permits the issuing and trading of stock tokens. OXK has since teamed up with ICE to launch trading in 63 NYSE-listed stocks and Securitize launched 12 Securitize Stocks, including Apple, Nvidia and Microsoft.  

The SEC has also issued guidance clarifying that a crypto token doesn’t become a security just because a project is buying back its own tokens, and stated that liquid staking tokens are not securities. It has also proposed new rules for the custody of crypto assets. 

The CFTC, meanwhile, moved to exempt some crypto software providers from registration requirements. It has proposed a new “crypto asset market” registration category and intends to allow registered exchanges to offer leveraged trading.

But the concern among some in the industry is that these rules could be built on shifting sands. TD Cowen has cautioned that agency rules “are the easiest to rescind” — which was demonstrated when Trump-appointed commissioners wiped away all traces of the Gary Gensler era.

A 2024 Supreme Court decision also means agency rules can more easily be overturned by the courts.