A coalition of 18 U.S. states has filed a lawsuit against the Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, accusing the agency of overstepping its authority and unfairly targeting the emerging cryptocurrency sector.
The lawsuit, led by states like Nebraska, Texas, Tennessee, Wyoming, and Ohio, alleges that the SEC has engaged in excessive enforcement without proper authorization from Congress. A portion of the legal filing asserts:
“The Securities and Exchange Commission (SEC) has disregarded the established division of regulatory powers. Without approval from Congress, the SEC has sought to claim regulatory control from the states through continuous enforcement actions.”
Crypto Firms Face Mounting Costs
According to the Blockchain Association, the SEC’s actions have forced crypto companies to spend a staggering $426 million on legal defenses since 2021. Industry leaders argue that the lack of a clear regulatory framework for digital assets is hindering innovation and creating unnecessary hurdles for developers in the U.S.
Gary Gensler Doubles Down Amid Trump Threats
With the possibility of Donald Trump returning to the presidency, speculation about a leadership shakeup at the SEC has intensified. Many expect that Gensler’s tenure could come to an end as early as January 2025, should Trump take office.
Potential successors are already being discussed, including SEC Commissioner Mark Uyeda, who has been vocal about his opposition to Gensler’s enforcement-heavy approach. In an October appearance on Fox Business, Uyeda criticized the current regulatory strategy, calling it “a disaster for the entire industry.”
Another contender for the role is Dan Gallagher, Chief Legal Officer at Robinhood and a former SEC commissioner (2011–2015). Gallagher has been actively pushing back against SEC actions, including a Wells notice sent to Robinhood Crypto earlier this year.
Despite these looming changes, Gensler remains steadfast in his stance against the cryptocurrency industry. Speaking at the Practicing Law Institute’s 56th Annual Institute on Securities Regulation on Nov. 14, Gensler reinforced his position, stating:
“This is a sector where we’ve seen significant investor harm. Beyond speculative trading and potential misuse for illegal activities, most crypto assets have yet to demonstrate sustainable real-world applications.”
The ongoing clash between the SEC and the cryptocurrency industry reflects broader debates about the future of digital assets and regulation in the United States.
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