18 State Attorneys General Including Kentucky Sue SEC
Claiming Overreach and Violation of State Autonomy
With the election of Donald Trump as the President of the United States expected to bring a favorable breeze to the cryptocurrency industry, 18 U.S. states have filed a lawsuit against the Securities and Exchange Commission (SEC), the regulatory authority. They allege that the SEC has excessively regulated the U.S. cryptocurrency industry beyond the agency's authority.
On the 14th (local time), according to the U.S. political media outlet The Hill, Russell Coleman, Attorney General of Kentucky, along with attorneys general from 17 other states, sued the SEC and five SEC commissioners. The lawsuit includes Republican attorneys general from Nebraska, Tennessee, West Virginia, Iowa, Texas, Mississippi, Montana, Arkansas, Ohio, Kansas, Missouri, Indiana, Utah, Louisiana, South Carolina, Oklahoma, and Florida.
They argued, "The SEC has put one of the fastest-growing economic sectors in the U.S. at significant risk by imposing penalties and restrictions on digital assets without an appropriate regulatory framework," and "By asserting broad jurisdiction without congressional approval and disregarding the constitutional balance of powers, the SEC has deprived states of their sovereign role to autonomously develop digital asset regulations."
On the same day, Gary Gensler, SEC Chairman, who attended the annual securities regulation conference hosted by the Practising Law Institute (PLI), defended the SEC's regulatory approach toward the cryptocurrency industry. Chairman Gensler explained, "Courts have already agreed with the SEC's actions to protect investors and have recognized that the SEC can enforce the law regardless of the form when securities are offered."
He rebutted criticisms of overregulation by stating, "The SEC is focusing its regulatory efforts on some of the approximately 10,000 digital assets that courts have considered securities, which fall under the SEC's jurisdiction." He added, "Cryptocurrencies have caused serious investor harm and have yet to prove sustainable use cases," emphasizing, "Anyone seeking to sell securities in the U.S. must be transparently registered."
The cryptocurrency industry views the current SEC under Chairman Gensler as having closed the growth window for the industry by pushing a punitive policy, which led to the collapse of FTX, once the world's largest cryptocurrency exchange. With Trump, who has shown a cryptocurrency-friendly stance, winning the election and signaling a change in SEC leadership after taking office, expectations for a favorable breeze in the industry are growing. Current candidates for SEC Chairman include Dan Gallagher, Chief Legal Officer (CLO) of Robinhood, and Chris Giancarlo, former Chairman of the Commodity Futures Trading Commission (CFTC).
Chairman Gensler, seemingly sensing his resignation was imminent, also left farewell remarks during his speech that day. He expressed, "The SEC is an amazing agency," and shared his reflections, saying, "It has been an honor to work with the SEC members who strive every day on the financial highway for the American people."
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