Challenging the SEC’s Crypto Regulation: States Unite
A coalition of seven U.S. states has banded together to oppose the Securities and Exchange Commission’s (SEC) oversight of cryptocurrency, led by Iowa Attorney General Brenna Bird. These states have jointly filed an amicus brief, contending that the SEC’s bid to regulate cryptocurrencies is an overreach that could stifle innovation, harm the crypto industry, and exceed the agency’s jurisdiction.
The states, including Arkansas, Indiana, Kansas, Montana, Nebraska, and Oklahoma, are challenging what they perceive as regulatory overreach by the SEC. They argue that the SEC’s actions may impede states from protecting their citizens against scams and disrupt the free market’s functioning. States like Iowa view the SEC’s actions as encroaching on their authority to prosecute wrongdoers and safeguard scam victims.
Resistance Against the SEC’s Authority
The amicus brief, filed on July 10, asserts that the SEC’s attempts to regulate cryptocurrencies are unlawful and circumvent the powers granted by Congress. The brief emphasizes that the SEC lacks the mandate to oversee cryptocurrencies, questioning the legitimacy of the agency’s actions and the absence of accountability.
Furthermore, the coalition of states argues that cryptocurrencies do not fit the definition of investment contracts outlined in the Securities Act of 1934. They highlight alleged violations of the Administrative Procedure Act and the Major Questions Doctrine by the SEC, urging the court to restrain the agency from overstepping its boundaries.
Insights from an SEC Commissioner
Earlier this year, SEC Commissioner Hester Peirce stated that the agency is focusing primarily on enforcement in its approach to regulating cryptocurrencies. Peirce, known for her supportive stance on crypto within the SEC, acknowledged the challenges faced by industry players navigating legal uncertainties.
Expressing frustration with the SEC’s treatment of cryptocurrencies, Peirce emphasized the need for clearer rules to foster innovation. She criticized excessive regulation that could impede progress and advocated for a more collaborative and understanding approach.
Notably, the SEC recently concluded a three-year investigation into Hiro Systems and resolved a case involving stablecoin issuer Paxos, signaling instances where the agency opted not to pursue enforcement actions against crypto entities.
Annotated hyperlinks source:
[1] Drummond Joins Amicus Brief Challenging SEC Cryptocurrency Regulation – Journal Record
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