Eighteen Republican attorneys general sued the Securities and Exchange Commission (SEC) and Chair Gary Gensler on Thursday for allegedly overstepping the agency’s authority in its enforcement actions against the cryptocurrency industry.
The states, led by Kentucky Attorney General Russell Coleman, argue that the SEC has sought to “unilaterally wrest regulatory authority away from the States” on crypto enforcement.
“Instead of respecting that constitutional balance of power, and allowing States to develop and enforce their own tailored digital asset regulations based on their own policy priorities … the SEC’s assertion of sweeping jurisdiction without congressional authorization deprives States of their proper sovereign role and chills the development of innovative regulatory frameworks for the digital asset industry,” the complaint reads.
“Still worse, by attempting to shoehorn digital assets into illfitting federal securities laws and inapt disclosure regimes, the SEC is harming the very citizens it purports to protect, by displacing better-suited state laws that have been carefully designed to ensure consumer protection in the digital asset industry,” it continues.
The crypto industry has feuded with Gensler and the SEC throughout the Biden administration, arguing that the agency has failed to provide clear rules of the road and has instead regulated crypto via enforcement.
Gensler defended his record on crypto enforcement earlier Thursday in remarks at a legal conference.
“Court after court has agreed with our actions to protect investors and rejected all arguments that the SEC cannot enforce the law when securities are being offered — whatever their form,” he said.
However, with President-elect Trump’s win next week, the SEC appears poised to shift gears on multiple fronts, including digital assets.
Despite once dismissing crypto as a “scam,” Trump has fully embraced the industry this time around, vowing to make the U.S. the “crypto capital of the planet” and remove Gensler.
The president-elect also recently launched a crypto platform alongside his sons called World Liberty Financial.