Attorney Generals from 18 US states have joined forces to file a lawsuit against the Securities and Exchange Commission (SEC), its Commissioners, and Chair Gary Gensler. The lawsuit accuses the agency of exceeding its constitutional authority by aggressively regulating the crypto industry. The coalition seeks declaratory and injunctive relief to stop what they see as an “unconstitutional persecution” of the crypto sector.
Leading the charge in this legal battle are Kentucky, Texas, Florida, and Nebraska, along with the DeFi Education Fund. The lawsuit argues that state governments have played a crucial role in promoting innovation and protecting consumers in the crypto space. States have created regulatory frameworks that support blockchain technology and serve as “laboratories for experimentation” for others to learn from.
The collective lawsuit includes states like Tennessee, West Virginia, Iowa, Mississippi, Montana, Arkansas, Ohio, Kansas, Missouri, Indiana, Utah, Louisiana, South Carolina, and Oklahoma. Notably, all 18 Attorneys General involved in the lawsuit are Republicans.
The complaint highlights various state initiatives, such as requiring digital asset platforms to obtain money-transmitter licenses, implementing regulations for digital asset taxation, and establishing procedures for handling unclaimed digital property. These measures aim to create a transparent regulatory environment that caters to local needs.
However, the lawsuit alleges that the SEC has ignored these state-led efforts and is attempting to impose a federal mandate without Congressional approval. The SEC’s enforcement actions are seen as an overreach that violates the constitutional separation of powers.
The lawsuit calls for judicial intervention to uphold state authority over crypto regulation and prevent further intrusion by the SEC. It aims to protect the innovative and consumer-friendly approach that states have taken towards regulating the crypto industry.
