GOP Attorneys General Sue SEC Over Crypto Regulation Authority
18 Republican state attorneys general filed a lawsuit against the SEC and Chair Gary Gensler, claiming infringement on states’ rights to regulate the cryptocurrency industry. The states, including Kentucky, Florida, and Texas, argue that the SEC is improperly applying federal securities laws to digital assets.
The complaint asserts that economic policy regarding cryptocurrency should be managed by state regulators, stating that the SEC's actions violate federalism and separation of powers principles.
This legal action parallels previous lawsuits, such as Coinbase’s case against the SEC, where Coinbase argued that the regulator was overstepping its authority. Coinbase's opening brief stated that the SEC is trying to expand its control over the digital asset industry without proper rulemaking processes.
The lawsuit emerges amid speculation that President-elect Donald Trump's second term may lead to revised crypto policies. Trump has promised to remove Gensler and appoint Elon Musk for government efficiency improvements, raising hopes that “regulation by enforcement” will end.
Gensler, who has not indicated plans to resign, stated at a New York legal conference that the SEC operates within legal bounds. He emphasized that courts have supported the SEC’s actions to protect investors and affirmed the agency's authority in regulating securities regardless of their form.
In closing remarks, Gensler expressed gratitude for his role, hinting at a possible resignation, which aligns with historical patterns where SEC chairs tend to leave when administrations change. Former Chair Jay Clayton resigned shortly after President Biden's win.
Monitoring developments is advisable as changes may occur soon.