In June 2024, the U.S. Supreme Court made a landmark decision to overturn the Chevron doctrine, a move that will significantly impact the regulation of cryptocurrencies by the Securities and Exchange Commission (SEC). 

This ruling could herald a new era for crypto investors and “HODLers,” potentially reducing regulatory uncertainties and enforcement actions that have plagued the industry.

Understanding the Chevron Doctrine

The Chevron doctrine (also known as “Chevron deference”) originated from the 1984 Supreme Court case *Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.*, which established that courts should defer to a federal agency’s interpretation of ambiguous laws if the interpretation was reasonable.

This two-step process first determined whether the statute was ambiguous. If so, the court would then defer to the agency’s reasonable interpretation.

The doctrine has allowed federal agencies like the SEC considerable leeway in interpreting laws, often leading to expansive regulatory actions.

Overturning Chevron: The Court's Decision

The Supreme Court’s decision in the consolidated cases *Loper Bright Enterprises v. Raimondo* and *Relentless, Inc. v. Department of Commerce* effectively ended Chevron deference.

Chief Justice John Roberts, writing for the majority, stated that courts must now exercise independent judgment when interpreting statutes and reviewing agency actions.

This decision shifts interpretive power from agencies back to the judiciary, ensuring that courts no longer defer to agency interpretations simply because a statute is ambiguous.

Examples of Abuse

The Loper Bright case is a result of a clear example of the abuse of Chevron deference. The National Marine Fisheries Service (NMFS) was requiring fishing companies to pay for federal compliance observers aboard their vessels, costing up to $710 per day. Despite statutory silence on this issue, lower courts upheld this mandate based on Chevron deference, placing significant financial burdens on these businesses, some of them small businesses.


Another example includes the Occupational Safety and Health Administration (OSHA) under the Biden administration, which attempted to mandate COVID-19 vaccinations for large employers. The mandate required workers in businesses with over 100 employees to get vaccinated or undergo regular testing. Critics argued that OSHA overstepped its statutory authority, as Congress did not explicitly grant OSHA the power to enforce such a sweeping health mandate. This reliance on Chevron deference allowed the agency to interpret its authority broadly, leading to significant controversy and legal challenges.


The Environmental Protection Agency (EPA) has also used Chevron to justify broad regulatory actions under ambiguous statutes, often exceeding what many believe to be the intended scope of congressional mandates. Such actions have created significant regulatory burdens for businesses and industries, highlighting the potential for overreach.

The SEC and Cryptocurrencies

The overturning of Chevron deference is particularly relevant for the SEC’s regulation of cryptocurrencies. The SEC has aggressively pursued enforcement actions against various crypto firms, alleging that certain digital assets are unregistered securities. Without Chevron, the SEC may find it more challenging to justify its expansive interpretations of securities laws in the crypto space.

 

For example, the SEC has been involved in high-profile lawsuits against companies like Ripple, Coinbase, and Binance, asserting that their activities involve unregistered securities. These companies argue that the SEC is overstepping its authority, and the Supreme Court’s decision could provide them with stronger grounds to challenge the SEC’s claims.

 

Crypto investors and HODLers might benefit from this ruling as it could lead to clearer and more predictable regulatory frameworks. By reducing the SEC’s ability to regulate through enforcement and ambiguous statutory interpretations, the industry could see less regulatory uncertainty and more consistent legal standards.

 

What This Means for Crypto Investors

The Supreme Court’s decision to overturn the Chevron doctrine represents a significant shift in the balance of power between federal agencies and the judiciary. For the cryptocurrency industry, this could mean a reduction in regulatory overreach and more clarity in legal interpretations. As crypto investors and HODLers navigate this new landscape, they can look forward to potentially fewer arbitrary enforcement actions and a more stable regulatory environment.

 

This ruling underscores the importance of judicial independence in statutory interpretation and marks a pivotal moment in the ongoing evolution of cryptocurrency regulation in the United States.