Seven states in the union are fighting against the Securities and Exchange Commission’s (SEC) cryptocurrency regulations.
The states, led by Attorney General Brenna Bird of Iowa, have filed an amicus brief in which they contend that the SEC’s attempt to regulate cryptocurrencies is an overreach of its authority and a “power grab” that would hinder innovation and the cryptocurrency industry.
The coalition includes Arkansas, Indiana, Kansas, Montana, Nebraska, with Oklahoma becoming the latest state to join.
States Push Back Against SEC Overreach
In an attempt to counter what the states see as the SEC’s overreach, the states filed the amicus brief on July 10.
The filing claims that the SEC’s actions might make it more difficult for states to protect their citizens from fraud and interfere with the free market’s ability to operate.
States like Iowa, who see the SEC’s actions as an infringement on their authority, have taken the initiative to protect scam victims and prosecute offenders.
The document stated, “The Biden SEC is attempting to stop states like Iowa from carrying out their responsibility to hold thieves accountable and shield families from the risks of cryptocurrency scams.”
“This power grab will also hurt the free market and allow the SEC to take the regulatory reins over the cryptocurrency industry with no accountability,” the announcement continues.”
According to the Iowa Attorney General’s Office, the SEC is acting illegally because it is defying Congress in order to obtain new authority.
It argues that the SEC does not have the authority to regulate cryptocurrencies, highlighting the lack of transparency to guarantee the necessity and validity of the agency’s operations.
【7 US States Unite to Challenge SEC's Crypto Overreach】
— MetaEra (@MetaEraHK) July 22, 2024
Seven U.S. states have united in a coalition to challenge the U.S. SEC regulation of cryptocurrency. The states filed an amicus brief arguing that the SEC’s “power grab” would stifle innovation, harm the crypto industry,… pic.twitter.com/R7eiTxYA7Y
The SEC is accused of violating both the Major Questions Doctrine and the Administrative Procedure Act, as highlighted in the amicus brief.
The states contend that the standard definition of investment contracts as stated in the Securities Act of 1934 does not apply to cryptocurrencies.
They implore the court to stop the SEC from going beyond its jurisdiction and the limits imposed by Congress.
SEC Commissioner Says Agency is in “Enforcement-Only Mode”
When it comes to regulating cryptocurrencies, SEC Commissioner Hester Peirce stated earlier this year that the organization is presently in a “enforcement-only mode.”
Known as one of the five commissioners on the SEC with a strong stance on cryptocurrency, Peirce acknowledged the strain industry players face in their ongoing efforts to stay out of legal hotspots.
“You could concentrate on building if we had more explicit rules,” she remarked.
Peirce publicly expressed her dissatisfaction with the SEC’s propensity to make judgments about cryptocurrencies as an asset class, emphasizing that her opinions were her own.
She said that overly restrictive laws would stifle creativity and advocated for a more compassionate and cooperative strategy.
The SEC concluded its three-year probe into Hiro Systems last week.
The agency’s conclusion of the investigation comes just a day after it closed a separate case involving stablecoin issuer Paxos, marking another instance where the regulatory body has opted not to pursue enforcement actions against crypto entities.