Chevron Deference: Crypto Edition

A win for crypto, BUT… July 01, 2024 [WEBSITE]( | [UNSUBSCRIBE]( This looks like a win, but let’s not pop the corks just yet. Chevron Deference: Crypto Edition CHRIS CAMPBELL Dear Reader, The Supreme Court's recent decision to overturn the Chevron Deference doctrine has sent shockwaves through the regulatory landscape, and… It’s a doozy. This weekend, I consulted some pros “in the know.” Here’s what I learned about its potential impact on everything from fishing boats to crypto. First… What is it? Chevron Deference was a 40-year-old legal principle that essentially gave federal agencies the power to interpret ambiguous laws as they saw fit. A lawyer acquaintance put it like this: “It was like handing the keys to the kingdom to a bunch of bureaucrats and saying, ‘Have at it, champs!’” Forty years ago, interpreting laws was a primary function of the courts. The principle of "judicial review" established that courts have the power to determine if laws are constitutional and to interpret their meaning. Chevron changed this: If a law was ambiguous, courts were instructed to defer to a federal agency's interpretation of that law, as long as the interpretation was “reasonable”. This shifted interpretive power from the judiciary to the executive branch, allowing agencies to have substantial influence over how laws were understood and applied in their respective fields. Thanks to this doctrine, agencies could essentially say, "We're the experts here, and we say this is totally legal." Courts mostly nodded along like bobbleheads, deferring to the agencies' "expertise”. The case that finally toppled this administrative Goliath? A David-sized family fishing company called Loper Bright Enterprises. These fishermen were being charged $700 a day by the National Marine Fisheries Service for the privilege of… wait for it… being monitored by the National Marine Fisheries Service. The kicker? There was no actual law authorizing these charges. The agency just decided to start playing fee collector in 2013, because why not? BUT The Turning Worm To be sure, this ruling didn’t come out of nowhere. Critics have long argued that Chevron blurred the lines between the branches of government, giving way too much power to unelected agency officials. One such critic has been Chief Justice John Roberts, who, writing for the majority, called the 40-year doctrine “fundamentally misguided”. He said that the underlying premise of the doctrine - that ambiguities were congressional delegations to agencies - is a “fiction” which wrongly enabled each administration to change regulations willy-nilly without enduring the legislative process. “By its sheer breadth,” Justice Roberts said, “Chevron fosters unwarranted instability in the law, leaving those attempting to plan around agency action in an eternal fog of uncertainty.” Of course, not everyone saw it as such. The Dissent Justices Sonia Sotomayer, Elena Kagan, and Ketanji Brown Jackson dissented the ruling, with Kagan writing that the ruling made a “laughing stock” out of stare decisis - the principle that prior judicial rulings should be respected. The principle of stare decisis, you see, is meant to provide stability and predictability in the law by ensuring similar cases are treated consistently over time. Legal experts on the other side poked holes in this argument; Chevron itself, they argue, was a departure from established judicial practice. It established a new doctrine of deference to agency interpretations, which wasn’t firmly rooted in long-standing legal tradition. Since its inception, the application of Chevron has been inconsistent and confusing. Different circuit courts have applied Chevron differently, with some being more deferential to agencies than others. This has led to circuit splits and inconsistent outcomes - even in similar cases. This, critics say, undermined the predictability and stability that stare decisis is meant to protect. The cracks really began to reveal themselves in 2016, when then-Judge Neil Gorsuch criticized the deference as unconstitutional, highlighting growing skepticism even within the judiciary. The dissenters nevertheless warn of the consequences, saying this ruling would lead to a flood of lawsuits challenging agency actions, paralyzing regulatory processes. Enter crypto. Secret A.I. Facility To Shock The World! [This A.I. chip]( looks like any other chip… On the surface, there’s nothing special about it… Yet I believe [this chip]( will play a major role in the artificial intelligence boom. It’s currently being mass-produced by the millions as we speak, in this facility you see here. The most shocking part of all? You’ll never believe who’s behind these powerful A.I. chips… It’s not Nvidia, or anyone else you might expect… [Click here now for the full story.]( What Of Crypto? Well, this is where things get interesting. The crypto industry has been operating in a state of regulatory uncertainty, with agencies like the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) fighting turf wars over who gets to rule over what. For the most part, these agencies have been flexing their Chevron-powered muscles, trying to fit square crypto pegs into round regulatory holes. For example, under Chevron, courts have given significant deference to how agencies like the SEC interpreted securities laws in relation to cryptocurrencies. It’s important to note that even with Chevron on its side, the SEC has been losing left and right. And with Chevron now in the rearview mirror, crypto companies MIGHT have an even bigger edge in court - with more grounds to challenge agency interpretations in court. Without speaking in absolutes, this could turn the tide for the crypto industry. Especially given Coinbase and Consensus are now going on the offensive and suing the SEC. While it’s unclear exactly how this will play out… Ultimately, the ruling may increase pressure on Congress to pass clear crypto-specific legislation. Meaning, we might finally get some clear, purpose-built regulations for digital assets, rather than trying to shoehorn them into rules designed for paper stocks and orange groves. But let's not break out the champagne just yet. Not Time to Celebrate… Yet. While "regulation by enforcement" may indeed lose some of its punch in the post-Chevron landscape, it will likely remain a tool in the regulatory arsenal. The threat of enforcement can still pressure entities into settlements or compliance, even if the underlying legal interpretation is more vulnerable. Agencies like the SEC will likely need to be more strategic and judicious in its use, ensuring their actions are firmly grounded in clear statutory authority. But they won’t just throw in the towel. Indeed, the crypto industry might have won a battle with the fall of Chevron, but the war is far from over. In the end, this Supreme Court decision is forcing regulators to rethink how we govern new technologies and industries. For crypto, it could mean a chance to break free from the outdated frameworks that have been holding it back. But it also means the industry will need to step up its game in advocating for sensible, innovation-friendly legislation. So, whether you're a crypto investor or just someone who enjoys watching bureaucrats squirm, keep your eyes on this space. The post-Chevron world is going to be interesting. Just remember to bring your own life jacket – the National Marine Fisheries Service probably can't charge you for one anymore. Bang bang. Until tomorrow, Chris Campbell For Altucher Confidential Rate this email Like Dislike Thanks for rating this content! Looks like something went wrong. Please try to rate again. Download This New Survival Guide Today! There is a “Crisis Survival Guide” that is available to all Altucher Confidential readers today. This short 54-page document has everything you need to know to protect yourself and your family in times of crisis. 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