- Coalition of seven states argues SEC’s overreach will devastate the cryptocurrency industry.
- Led by Iowa’s Attorney General, the coalition claims the SEC’s actions stifle innovation and exceed its authority.
A coalition of seven U.S. states has banded together to oppose the Securities and Exchange Commission’s (SEC) regulatory approach towards the cryptocurrency industry. This coalition, led by Iowa Attorney General Brenna Bird, includes Arkansas, Indiana, Kansas, Montana, Nebraska, and Oklahoma. They argue that the SEC’s current trajectory could bitcointhe Bitcoin and broader cryptocurrency sector.
These states have filed an amicus curiae brief, providing their perspectives and arguments to the court. Their primary contention is that the SEC is engaging in a power grab that stifles innovation and harms the burgeoning digital asset industry. They believe this overreach is not only detrimental to technological progress but also undermines state laws designed to protect consumers.
Attorney General Bird emphasizes that the SEC is attempting to bypass state-level consumer protection laws and usurp powers that were never granted to it by Congress. She states,
“The SEC of Biden is trying to prevent states like Iowa from doing their job to hold scammers accountable and protect families from cryptocurrency fraud. This power grab also harms the free market, allowing the SEC to take regulatory control of the cryptocurrency industry without accountability. Granting itself new powers without congressional approval is illegal, stifles innovation, and leaves fraudsters unpunished.”
The coalition’s brief asserts that the SEC is in violation of the Administrative Procedure Act and the Major Questions Doctrine. These legal frameworks require explicit congressional authorization for significant regulatory actions, something the states argue the SEC lacks in this context.
The SEC has faced increasing criticism over the past few years regarding its handling of cryptocurrency regulation. The agency, under the leadership of Gary Gensler since April 2021, has been accused of adopting an overly aggressive stance that many in the industry view as counterproductive. In 2023 alone, the SEC issued numerous legal actions against various crypto entities, leading to widespread discontent.
Notably, Coinbase, the largest cryptocurrency exchange in the United States, has also taken legal action against the SEC. The exchange alleges that the SEC and other regulators have been uncooperative in providing necessary guidance, instead employing tactics aimed at stifling the industry. Coinbase’s lawsuit underscores the broader frustration within the cryptocurrency community regarding regulatory clarity and fairness.
As this legal battle unfolds, the coalition of seven states remains steadfast in its position that the SEC’s approach not only oversteps its bounds but also threatens the future of cryptocurrency innovation and consumer protection.
