States Push Back Against SEC Overreach
A coalition of seven U.S. states has come together to challenge the Securities and Exchange Commission’s (SEC) regulation of cryptocurrency. Led by Iowa Attorney General Brenna Bird, the states have filed an amicus brief arguing that the SEC’s attempt to regulate cryptocurrencies constitutes a “power grab” that would stifle innovation, harm the crypto industry, and exceed the agency’s authority.
The coalition includes Arkansas, Indiana, Kansas, Montana, Nebraska, with Oklahoma becoming the latest state to join.
The Amicus Brief
The amicus brief was filed on July 10 as a united effort to push back against what the states perceive as overreach by them. According to the filing, the them actions could potentially impede states from safeguarding their citizens against scams and disrupt the functioning of the free market.
States like Iowa have been proactive in protecting victims of scams and prosecuting wrongdoers, and they view the SEC’s actions as an infringement on their jurisdiction.
“The Biden SEC is trying to prevent states like Iowa from doing their job to hold robbers to the law and protect families from the dangers of cryptocurrency scams,” the filing read.
“This power grab will also hurt the free market and allow the them to take the regulatory reins over the cryptocurrency industry with no accountability”, the announcement continues.
Iowa Leads the Charge
The Iowa Attorney General’s Office asserts that them actions are unlawful as the agency is circumventing Congress to assume new powers. It contends that the SEC lacks the mandate to regulate cryptocurrencies, emphasizing the absence of accountability to ensure the legitimacy and necessity of the agency’s actions.
The amicus brief highlights the alleged violations of the Administrative Procedure Act and the Major Questions Doctrine by them. The states argue that cryptocurrencies, in their typical form, do not fall under the definition of investment contracts as outlined in the Securities Act of 1934. They urge the court to prevent the SEC from exceeding its authority and overstepping the boundaries set by Congress.
SEC Commissioner Says Agency is in “Enforcement-Only Mode”
Earlier this year, Them Commissioner Hester Peirce said that the regulatory agency is currently operating in an “enforcement-only mode” when it comes to the regulation of cryptocurrencies. Peirce, known for her crypto-friendly stance among the them five commissioners, acknowledged the burden placed on industry participants who constantly worry about avoiding legal disputes.
“If we had clearer rules, you could focus on building”, she said.
While stressing that her views were her own, Peirce openly voiced her frustration with the them tendency to pass judgment on cryptocurrencies as an asset class. She remarked that excessive regulation would hinder innovation and urged for a more understanding and collaborative approach.
Last week, the SEC closed its three-year investigation into Hiro Systems. 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.
