The Fall of Chevron and the Future of Tech Regulation
What happens to the regulatory regime now that Chevron Deference is over?
The Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo has dismantled a cornerstone of administrative law—Chevron deference—upending decades of precedent and shifting the balance of power in the regulatory ecosystem. To illustrate the magnitude of this shift, I will unpack what Chevron deference entailed, why it mattered, and what its demise signals for governance in an era increasingly dominated by technological and economic complexity.
What Was the Chevron Deference?
Chevron deference, born out of the Supreme Court’s 1984 decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., granted federal agencies the authority to interpret ambiguous statutes within their jurisdiction. The principle was simple yet transformative: when Congress enacted broadly worded laws, it was often up to agencies—with their subject-matter expertise—to fill in the regulatory gaps. Over the past 40 years, Chevron deference has been invoked in more than 19,000 federal court cases, allowing regulators to craft rules with a level of flexibility and adaptability that aligned with evolving societal needs.
Congress, in turn, relied on this judicial precedent to legislate broadly, trusting agencies to refine and implement policies. This dynamic fostered an environment where administrative bodies could act swiftly in areas like environmental protection, financial regulation, and emerging technologies.
The New Reality: A Shift in Power
With the Supreme Court’s decision in Loper Bright, the framework that enabled such flexibility is gone. Federal agencies no longer have the power to enforce regulations based on their interpretations of ambiguous laws. Instead, they are constrained to act only when explicitly authorized by Congress or affirmed by federal courts. In essence, the power to interpret legal ambiguities has shifted from agencies to judges.
Supporters of this shift argue that it curtails government overreach, promotes individual freedoms, and fosters innovation by reducing regulatory burdens. Critics, however, raise alarms about the implications for public safety, accountability, and equitable governance. This tension is particularly pronounced in domains where the law has struggled to keep pace with technological advancement.
Implications for Cryptocurrency Regulation
The cryptocurrency sector exemplifies the challenges of this new regime. Historically, agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have relied on broad statutory interpretations to regulate digital assets. Without Chevron deference, many of these rules may now face heightened legal scrutiny.
Consider the case of Uniswap, a developer of decentralized exchange software. The SEC has argued that Uniswap functions as an unregistered securities exchange in violation of federal laws. In the post-Chevron era, such cases may hinge on narrow statutory definitions, potentially limiting the SEC’s ability to enforce regulations. This creates a vacuum where Congress must step in to enact explicit legislation tailored to the crypto industry—a politically fraught and time-intensive process.
As Alexander Blume, CEO of Two Prime, observes, “The end of Chevron deference creates an obligation for Congress to write new laws for new technologies. It makes regulation more of a political issue than a bureaucratic one.” While this shift may benefit crypto companies in the short term by stymying enforcement actions, it also raises concerns about investor protection and market stability.
Implications for AI Governance
Artificial intelligence (AI) presents an even more daunting challenge. The rapid proliferation of AI tools and systems has outpaced existing regulatory frameworks, leaving agencies to navigate uncharted territory. Without Chevron deference, efforts to regulate AI could become mired in legal challenges, undermining attempts to address critical issues like algorithmic bias, data privacy, and safety risks.
The absence of Chevron deference places a heavier burden on Congress to craft comprehensive AI legislation. Yet, legislative inertia and partisan gridlock make this a daunting prospect. Meanwhile, governance researchers and policymakers must grapple with how to mitigate the fallout. Proposals might include creating bipartisan commissions to draft AI regulations or leveraging international collaborations to establish baseline standards.
Broader Concerns: Privacy and Data Protection
The erosion of regulatory authority comes at a time when privacy and data protection are under siege. The Trump administration’s deregulatory agenda—coupled with the enduring leeway granted to Big Tech under Section 230 of the Communications Decency Act—has already emboldened technology companies. With the demise of Chevron deference, agencies like the Federal Trade Commission (FTC) may find it increasingly difficult to hold corporations accountable for data breaches and exploitative practices.
This is particularly troubling as cyberattacks become more frequent and sophisticated. In a world where regulators are hamstrung and legislative solutions remain elusive, how do we ensure that consumers are not left vulnerable to the whims of corporate actors?
Navigating the Post-Chevron Landscape
The end of Chevron deference is, as one commentator put it, “an anti-regulation ruling by the court.” While less regulation may offer investors greater freedom and foster innovation, it also heightens the risk of fraud, market instability, and harm to vulnerable populations. To address these risks, policymakers must adopt proactive strategies:
Legislative Precision: Congress must prioritize the drafting of clear, detailed statutes that account for emerging technologies and complex industries.
Strengthening Judicial Expertise: As courts assume greater responsibility for interpreting ambiguous laws, there is a pressing need for judicial education on technical and scientific issues.
Collaborative Governance: Agencies, legislators, and industry stakeholders must work together to develop flexible yet enforceable regulatory frameworks.
Public Engagement: Citizens must be informed and engaged in shaping the regulatory landscape to ensure that it reflects democratic values and public interest.
Final Reflections
The Supreme Court’s decision to dismantle Chevron deference marks a seismic shift in the regulatory regime, one that will reverberate across industries and institutions. As we navigate this new landscape, the stakes could not be higher. Whether it’s safeguarding investor protections in the cryptocurrency market, regulating AI to prevent harm, or defending privacy in an era of rampant data exploitation, the absence of Chevron deference demands that we rethink how governance operates in a rapidly changing world.
The question is no longer whether regulation will happen, but how—and whether we can rise to the challenge of crafting a system that balances innovation with accountability, freedom with fairness, and progress with protection.
