18 Different States Come Together To Take On The SEC

Eighteen U.S. states have come together to file a significant lawsuit against the SEC, challenging what they see as excessive federal control over cryptocurrency regulation. The lawsuit, spearheaded by Kentucky Attorney General Russell Coleman, includes AGs representing states like Florida, Texas, and Tennessee.

If successful, this lawsuit may result in significant changes for the U.S. crypto industry, potentially giving states like Oklahoma and Iowa more authority over crypto regulation. With key political players in power and a possible shift in leadership at the SEC, the outcome of this case could lead to clearer, more innovation-friendly crypto rules, reducing federal overreach and allowing states to play a bigger role in shaping the future of digital assets.

A Cruel And Unusual Approach

The aforementioned leaders argue that the approach adopted by the SEC concerning crypto rules is vague and infringes on numerous state rights. The core issue, they argue, is that the SEC wants to treat most cryptocurrencies as securities, which has led to enforcement actions against major crypto companies such as Coinbase and Ripple for failing to register their assets.

The states contend that these actions are not only overstepping the boundaries of what the SEC is actually allowed to do but also disregarding the intentions of Congress when it comes to crypto oversight. They believe such federal interference could stifle the growth of the rapidly developing digital assets industry. Instead, the AGs advocate for crypto regulations to remain at the state level, where they can be tailored to local needs and foster innovation.

Garnering Support

Unsurprisingly, the lawsuit has garnered significant political and industry support. Figures like Tennessee Senator Bill Hagerty have criticized the SEC as being anti-crypto, aligning the lawsuit with broader political promises to limit federal control over the sector. Industry advocates, along with AGs representing states like Indiana, Mississippi, and Missouri, argue that states are better equipped to craft sensible, effective crypto regulations.

The case also taps into a wider movement to shift regulatory authority by the federal government to the states. For example, John E. Deaton, a former U.S. Senate candidate, recalled his own legal battles against the SEC in 2021, which he believes were part of a broader effort by the SEC to expand its jurisdiction over digital assets.